I was asked yesterday if I thought that the public sector is doing enough to promote innovation (in industry)? I was participating in a workshop (on-line of course) looking at the results of a survey into SME’s in the GI sector. The survey had been conducted by the JRC and the on-line workshop replaced the physical one which had been planned for early April.

It was very enjoyable and left me regretting that we had not been able to meet and certainly have some really interesting discussions. The time available to exchange on-line and the singular nature of the exchanges means that topics are not developed as far as they might otherwise be. This was very much the case here where I really wanted to challenge some of the views and enter into more discussion. Others would almost certainly also have wished to challenge me!

The initial response to the question I posed above was that this is not the role of the government. Rather, the public sector is an important customer for geospatial services, and it is for the company to develop innovative solutions which then become a source of competitive advantage. Now of course, to an extent, this is true. An operational public department, maybe part of a local authority, has a limited budget and is only (rightly) concerned with results. But for me, this is a bit too simple.

In our (EARSC) survey of the industry, we find that the public sector generates around 65% of the revenues of the EO services sector. The JRC SME survey finds roughly the same for geospatial services. But this disguises an important and key fact. Some 50% of the revenue is coming from the public sector as a customer whilst 15% is coming from R&D or industrial policy activities. In other words, nearly 80% of the spend by the public sector is for services which they need for their public mission. We can go further because some of the R&D expenditure is to improve the services which they are themselves buying. So, of the 65% of sector revenues, around 85% is needed by the public sector.

The key point here is to distinguish between the role of the public sector as a customer and that as a sponsor. Indeed, the public sector confuse these roles themselves as may be seen in the organisation of the European Commission itself! Copernicus is a space programme coming under the DG for Defence Industry and Space. How much better and clearer if it came under a DG with responsibility for geospatial information – together with a geospatial agency to deal with operational aspects.

Returning to the question. As a customer, the public sector may not be directly concerned with stimulating innovation which is more directly linked with research ie Research and Innovation. But why not link the policies to get the maximum benefit from the public investments? In this way, customers in the public sector can stimulate innovation in industry (and academia) to help create a more competent industry with the capacity to compete in the global market. A mechanism does exist for this, but we should seek others as well. The existing mechanism is called pre-competitive procurement which is a policy which originates in the US, has been used in Europe but not enough in my opinion.

So, in answer to the question, yes, I think the public sector should and can do more to drive innovation in industry and by doing so improve the services which they make use of at the same time as helping the industry develop its own competence to compete in world markets. At this time of recovery from the Covid crisis, this can be an excellent tool to help rebuild industry.

I wrote previously about the Covid situation in Italy and some thoughts on how the situation might be brought back under control. Now one month later, many countries in Europe are starting to unwind slowly the confinement measure imposed – absolutely necessary in my view – to bring the pandemic under control. Some countries seem to have used the time to prepare for a test, trace and isolate system to maintain control whilst others such as UK and USA seem only to have been concerned with communications rather than a serious attempt to reduce the impact on their countries.

In Belgium, I believe the authorities are doing a good job. They are very transparent with the figures and how they are calculated and the only issue which concerns me is that the capacity for testing could be higher. The appropriate response to the pandemic has changed and with the system in place, no longer are national figures relevant and we should be looking for small local outbreaks which, like small fires smouldering after a major incendiary, need to be snuffed out quickly before they can take hold.

We have been conducting a survey of our members to see what impact the pandemic is having on them. The results show that most companies have adapted quite well to the situation by moving their production out of the offices and into employees homes and that few are suffering immediate problems. Most of their revenues are coming from contracts (rather than single product sales), most can be executed on-line and some are even seeing advantages coming from the shut-down. For example, it is much easier to fly survey aircraft at this time. There is also demand for information on natural resources and statistics linked to the pandemic.

However, most are somewhat fearful for the future in 6 months when contracts start to come to an end and customers budgets are squeezed due to many competing priorities. The first concern is for commercial contracts where private-sector customers will face cash-flow issues but public budgets will also be affected. In my view, they may also face problems with access to capital, as lending will be in heavy demand and competition fierce.

But with a crisis come opportunities and the EO services sector would appear to be in a position to benefit as well. The much-heightened awareness of security of supply chains will generate a need for more business intelligence to inform on bottle-necks, on delivery channels, and on capacity. The links between the crisis and environmental factors will increase the demand both for climate-related information and specific environmental / ecosystem factors such as deforestation, sustainability, pollution risk etc. And of course, the climate pressures, although ameliorated slightly in the short-term, will not go away and the need for more information linked to security and threats from natural disasters is likely to accelerate.

And a final thought, the crisis is going to drive significant M&A activity as companies with cash and buying power are able to seek out bargains. Will we see a wave of consolidations in the EO and space sectors?

At EARSC, we seek to help companies prepare for this changing world, firstly by surviving and secondly to offer the best products and services to as large a market as possible. We shall continue to do this. At the end of next month, I shall hand the role of secretary-general over to my successor – Emmanuel Pajot. I shall continue to support EARSC but just at a lower level of activity than at present. I’ll no doubt write about this again in the future. In the meantime, stay safe.