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Resources for Information Technology Research
Pages 48-98

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From page 48...
... The first section provides a framework for evaluating trends by explaining the importance of diversity in research portfolios, a theme carried forward through the chapter. The next two sections examine levels of government and industry funding for IT research, concentrating on the years 1987 to 1998.
From page 49...
... Rather, they refer to academic disciplines (e.g., computer science and electrical engineering) or industry classifications (e.g., office and computing equipment and computing and data processing services)
From page 50...
... A living organism carries a small amount of genetic material in addition to the genes that are essential for function. In a static environment, this genetic diversity imposes a cost beyond that carried by a species whose members are genetically identical and specifically tuned to exploit the environment.
From page 51...
... Of course, it can be difficult to quantify the opportunity cost, which, at best, may be measurable only in retrospect. FEDERAL SUPPORT FOR INFORMATION TECHNOLOGY RESEARCH The federal government has been a strong supporter of IT research since World War II.
From page 52...
... Combined federal funding for computer science and electrical engineering grew from $1.4 billion to $2 billion in constant dollars between 1990 and 1998 a 40 percent increase in real terms (Figure 2.1~.3 However, federal funding for IT research remained virtually unchanged in real terms between 1993 and 1997, when the Internet and the World Wide Web began to exert a significant influence on the nation's economic and social structure, and when combined sales of IT goods and services were growing at an annual rate of more than 10 percent in real terms.4 In other words, the explosion in IT applications throughout industry, government, and society was not matched by a commensurate increase in federal research support for the field even as those applications began pushing beyond the knowledge limits of the underlying technology and began opening up new research opportunities. Despite the gains in funding for IT as a whole, federal support for research in electrical engineering appears to have declined between 1990
From page 53...
... and 1998. The data suggest a 16 percent drop in real terms, from $764 million to $639 million in constant dollars (Figure 2.2~.
From page 54...
... — 1990 1991 1992 1993 1994 1995 1996 1997 1998 FIGURE 2.2 Federal obligations for research in electrical engineering, 1990 to 1998. SOURCE: National Science Foundation (2000a)
From page 55...
... In computer science, combined federal expenditures for basic and applied research (also referred to as "total research") more than doubled in real terms between 1990 and 1998, growing from $671 million to $1.4 billion in constant 1998 dollars (Figure 2.3~.
From page 56...
... Although the DOD has driven many important IT innovations in the past 50 years, the field's reliance on this one agency makes IT research support especially sensitive to fluctuations and directions in defense spending and to repeated calls for research to be more relevant to defense missions. Defense budgets declined significantly in the post-Cold War environment, with total defense R&D declining 24 percent in real terms from its high in 1989 to 1999.5 Although DOD funding for computer science research grew 32 percent in real terms between 1990 and
From page 57...
... Steep increases in spending by NSF and DOE during those years more than compensated for fluctuating military funding, but increases in computer science spending were not matched in spending for electrical engineering. The DOD funding for electrical engineering research dropped 20 percent in real terms between 1990 and 1998, driving the decline in total federal funding for the field.
From page 58...
... DARPA's program managers assemble and oversee research portfolios within particular thematic areas. Researchers themselves play an indirect role in setting the objectives of the program through their interactions with program managers, and some DARPA programs specifically allow investigatorinitiated proposals within the research theme of the program.
From page 59...
... In keeping with a trend throughout the NSF, CISE is sponsoring more interdisciplinary work, engaging more social scientists (e.g., in support of better user interfaces or better systems to support group interaction) and researchers in the natural sciences to work in collaboration with computer scientists and engineers.
From page 60...
... , are different from PACI and the infrastructure component of the NGI because of their more balanced integration of application objectives with IT research. Federal Information Technology Research Programs The majority of recent federal funding for IT research has been provided under the umbrella of the High Performance Computing and Communications Initiative (HPCCI)
From page 61...
... , the initiative provided an additional $366 million in federal funding for IT R&D to support (1) long-term research in software, human-computer interfaces and information management, scalable information infrastructure, and high-end computing; (2)
From page 62...
... Each of these is exploring different aspects of the post-PC era in which computing will be embedded into a range of information devices.~3 In late 1999, NSF issued a solicitation for proposals under its agencywide Information Technology Research (ITR) program, which called for research in eight areas related to IT: software, IT education and workforce, human-computer interfaces, information management, advanced computational science, scalable information infrastructure, social and economic implications of computing and communications, and revolutionary computing (NSF, 1999~.
From page 63...
... RESOURCES FOR INFORMATION TECHNOLOGY RESEARCH 63 and responded to by a fixed staff already busy with ongoing responsibilities. Extraordinary efforts were made to recruit experts to participate in the necessary peer review.
From page 64...
... Federal statistics indicate that companies in the six industry sectors most closely related to the manufacture and supply of IT products and provision of information services office, computing, and accounting machines, communications equipment, electronic components, computer and data processing services, professional and commercial equipment and supplies, and communications services invested some $52 billion in R&D in 1998. Detailed data are not available for the professional and commercial equipment and supplies industry.
From page 65...
... The computer and data processing services industry, despite its significant R&D expenditures both in nominal terms and as a percentage of sales, also invests relatively little in research: its research expenditures accounted for just 14 percent of the IT industry total in 1998. The computer and data processing services industry encompasses firms engaged in a wide variety of activities, from the development of prepackaged software (another "component")
From page 66...
... The following sections examine trends in industrial research support, R&D at large companies, disincentives to corporate R&D investment, gaps in systems integration research, research by end-user organizations, and venture capital support for innovation. Trends in Industry Support Trends in industrial support for IT research over the past decade are difficult to discern because of limitations in data collection and inconsistencies in the available data.
From page 67...
... R&D in computing and data processing services appear to have grown, while R&D in communications services declined. These trends mirror the data on R&D reported by firms in their annual filings to the Securities and Exchange Commission, although the magnitude of the changes is considerably less dramatic (Table 2.4~.
From page 68...
... Census Bureau statistics. almost three-quarters of all reported IT industry R&D in 1998,19 such spending declined moderately in real terms between 1991 and 1994 and then grew rapidly between 1995 and 1999.
From page 70...
... Microsoft's R&D spending jumped from $270 million to $2.9 billion in real terms between 1991 and 1999 and Intel's leapt from $711 million to $3.1 billion. Cisco Systems, a relative newcomer to the field, increased its R&D investment to more than $1.5 billion in 1999.
From page 71...
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From page 74...
... For example, there is little incentive to do research on technically superior alternatives to common standards such as TCP/IP, Microsoft Windows, or the Intel microprocessor architecture; the rewards are more obvious for products that leverage these de facto standards.22 In this environment, there is less innovation in the form of fundamental improvements, which would challenge the dominant technologies; instead, innovation tends to be seen in new products and services that cleverly adapt these technologies to new market needs.23 For example, the Internet's basic protocol, IPv4, which provides only about 4.3 billion unique addresses, may not provide a large enough address space to meet future demands as the Internet grows. A replacement, IPv6, which is generally thought to not only provide a vastly larger address space but other technically superior features, was developed in anticipation of this need, but because of the high cost of getting everyone to switch protocols it has thus far failed to catch on in the marketplace.
From page 76...
... A Countertrend in Central Research Laboratories Competitive pressures have not forced the traditional IT research labs to give up on fundamental research entirely. For example, Lucent Technologies supported a Bell Labs cosmologist who was attempting to detect hidden dark matter in the universe.
From page 78...
... Microsoft Research grew to some 200 researchers by 1999, even expanding to include a facility in England, and further growth has been planned. Research groups are maintained in a dozen areas, including speech recognition, decision theory, and computer graphics.
From page 79...
... , systems integration first became an issue in the 1960s, when federal agencies began hiring contractors to design large-scale systems for data processing, communications, and aerospace and defense applications. Over the next 40 years, the emergence of distributed personal computing, local area networks, and, more recently, the Internet, drove a growing need for systems integration.
From page 80...
... Neither Andersen Consulting nor EDStwo of the largest systems integration firms report R&D expenditures in their annual reports (Table 2.6~. Andersen does have a small research division that employs about 200 computer scientists and business analysts to identify interesting technologies and build prototype applications for testing with potential customers; however, the division constitutes a small part of the company.29 Its work focuses on areas such as e-commerce, intellectual asset management, and work group productivity.30 Lockheed Martin, a diversified company with approximately $1 billion in R&D TABLE 2.6 Research and Development Investments of Representative Systems Integrators, 1998 (millions of dollars)
From page 81...
... Examples of horizontal structure are evident in the computer industry, with Microsoft specializing in operating systems and applications software, Intel in microprocessors, Compaq in computer platforms, and SAP in systems integration and business applications. The communications industry exhibits a similar pattern, with the separation of voice and data communications service providers (such as AT&T and America Online)
From page 82...
... Industry IT Budget As Share of Projected Revenues R&D Budget As Share of IT Estimated IT R&D As Share of Projected Sales Revenues Banking and financial services Professional services Telecommunications Health care Construction and engineering Information technology Pharmaceuticals and medical equipment Transportation Media and entertainment Insurance Manufacturing Metals and natural resources Retail and distribution Energy Utilities Chemicals Consumer goods Electronics Hospitality and travel Food and beverage processing Median / average 9 7 5 4 6 4 4.5 4 3 4 3 3 4 4 ~ 6 4 5 3.5 ~ 2.5 4 2 5 2.5 3 2.5 2.5 3.5 3 2 1.5 3.6 4 3 3 3 2 2 4 3 4 0.45 0.28 0.24 0.18 0.18 0.16 0.15 0.12 0.12 0.11 0.10 0.10 0.10 0.09 0.08 0.07 0.07 0.06 0.06 0.05 0.14 SOURCE: Information Week (1999~.
From page 83...
... .34 Online retailer Amazon.com spent $47 million to enhance the features, content, and functionality of its Web sites and transaction-processing systems and upgrade its systems and telecommunications infrastructure.35 Merrill Lynch spent hundreds of millions of dollars to develop a new computing platform for its financial advisors and a Web-based interface that allows customers to access their accounts and company research, consult with their financial advisors, and conduct e-commerce.36 The much smaller online investment firm, E* Trade, spent $33 million 13 percent of its total revenues on technology development in 1998 to enhance its product offerings and maintain its Web site.
From page 84...
... Available online at . 150,000 orders at the same time.
From page 85...
... As the Congressional Budget Office (1999) has noted, "venture capitalists increase the number of new ideas introduced into the economy from the stock of ideas generated in the laboratory," thereby enhancing the efficiency of R&D.
From page 86...
... Venture capitalists reportedly invested $3.8 billion in Internet-related companies in the second quarter of 1999, up from $1.4 billion in the second quarter of 1998 and more than the $3.3 billion invested during all of 1997.42 In contrast to the much smaller amounts of VC in Europe and Japan, almost half of VC investments in the United States represent early-stage
From page 87...
... They are major performers of research funded by both government and industry, and they are the source of the educated professionals who populate industrial and government research laboratories as well as university faculties. University research has had a significant impact on the evolution of IT and related practices.
From page 88...
... But these statistics indicate that the rise is attributable almost entirely to increases in federal funding for computer science research, which expanded from $336 million to $470 million during the period of interest; federal funding for university research in electrical engineering rose at a rate of only 0.9 percent between 1990 and 1998 (from $165 million to $177 million) and actually declined in real terms after 1993.44 Additional IT-related research is conducted in university departments other than computer science and electrical engineering, but it tends not to be captured fully in federal statistics.
From page 89...
... RESOURCES FOR INFORMATION TECHNOLOGY RESEARCH 800 700 In <~ 600 = o 00 at' 500. Cal En c' 400 o En 300 200 100 O 89 Computer science Electrical engineering ~ Total ........
From page 90...
... Companies may sponsor research of potential interest to them, providing support for a faculty member and graduate students, or they may participate in collaborative programs in which industrial and academic researchers work side by side to bring new technology to market.45 Organizations such as the Semiconductor Research Corporation (SRC) , whose members include most of the nation's largest manufacturers of integrated circuits, pool research funds and make grants to universities for nonproprietary research that will help a range of member companies.
From page 91...
... lust as industry research can become compartmentalized along product lines and industry sectors, academic research can track individual disciplines too closely. Faculty members tend to be rewarded on the basis of their contributions to a particular field, so setting off in new directions can have adverse consequences.
From page 92...
... Stanford University, for example, gave rise to a number of well-known Silicon Valley companies, including Sun Microsystems and Cisco Systems. MIT also gave rise to a number of firms, ranging from Open Market, Inc., an e-commerce firm, to RSA Data Security, which specializes in public key encryption, and more recently Akamai, which streamlines the downloading of content from popular Web sites.
From page 93...
... MIT Technology Licensing Office, Cambridge, Mass., March. Available online at .
From page 94...
... 1995. Evolving the High Performance Computing and Communications Initiative to Support the Nation's Information Infrastructure.
From page 95...
... 1999. "Information Technology Research: Program Solicitation, NSF 99-167," September 28, available online at .
From page 96...
... , communications services (SIC 48) , and computer and data processing services (SIC 737~.
From page 97...
... R&D investments for all firms contained in the NSF survey of industrial R&D in the office and computing equipment, communications equipment, electronic components, communications services, and computing/data processing services industries in 1998 totaled $45 billion.
From page 98...
... Considerable controversy has arisen around this subject. The Computer Science and Telecommunications Board is developing a prospectus for a study of this issue.


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