The Connected Digital Economy Catapult

Overview
Igniting new digital innovations to power sustained growth in the UK
The speed of growth in data is well known: it has been estimated that the total amount of data at our disposal will grow more than tenfold in the next five years. Most of this material is unstructured. It doesnt sit in neat rows in a database, but takes forms such as voice, text, tweets, email and video. New forms of technology are needed to handle these complex data that come directly from humans, managing complex ideas expressed in complex forms Widespread adoption of these technologies is imminent and with it the potential for ancillary services to develop. First-mover advantage will be critical, and the UK is very well positioned to provide many of these businesses and services. Extract from letter to the Prime Minister from the Council of Science and Technology, 7 June 2013

This short overview of CDEC gives a sense of the market we are operating in, the challenges facing digital innovators and the opportunities that we see to help them. It describes our vision, our strategy, the key elements of how we propose to execute that strategy and the approach, which, we believe, will ensure our success. We want you to work with us to build this new business and support UK digital innovators. Please take a look at cde.catapult.org.uk for details of what we are doing and how to get involved.

CDEC Making a difference in the connected digital economy

! Our key differentiator lies in our neutral convenor role. There are many opportunities for industry-led
innovation and growth that have not gained traction because of commercial tensions between the players. The UKs innovation landscape has many areas of excellence but is often fragmented and lacks critical mass we will act as a connector to bring innovators together to collaborate on programmes and projects of significance. We will combine our convening role with capabilities to build platforms, skills and assets that many innovators can use. Our use of agile and quick-start project methodologies to build these platforms, together with our lean and outsourced approach to bringing together the necessary resources and capabilities means that we can move with the speed required to meet the needs of digital economy innovators. This agility and flexibility will be used for rapid testing and development of new concepts. We will build a high density of specialist, but commercially oriented skills critical to innovation in our target areas. These include technical, and creative and design skills as well as specific skills relevant to the challenges of the data value chain in areas such as security, privacy, trust and business modelling. We will also devote significant effort into the end-to-end journey of innovators towards commercialisation including giving them flagship Collaboration and Showcase Studios within the CDEC Innovator Centre to showcase their innovations and connect them to end users and customers. UKs innovation support landscape.

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! Critically, it is the end-to-end co-location of these features in CDEC that so differentiates us in the

Overview of the Connected Digital Economy Catapult

The connected digital economy

THE CONNECTED DIGITAL ECONOMY

The connected digital economy, spanning the creative and technology sectors, contributed 860 billion to world GDP between 2007 and 2012, according to Booz & Co. It is particularly vibrant in the UK where 24,000 new companies were created in 2011, greater than any other sector, with small companies dominating. This rapid generation of new business is enabled by the very low barriers to entry. One of the key characteristics is how quickly companies can grow. For instance, Snapchat, an app that allows friends to share photo and video moments via smartphone has seen remarkable growth launching in late 2011, it grew to 50 million photos shared per day by the end of 2012 and six months later reached 200 million photos per day. This growth is enabled by the globally connected nature of the markets that digitally enabled companies can easily address. The importance of digital economy services to SME business success cannot be overemphasised Booz & Co. estimates that use of digital technology can help SMEs to unlock 18.8 billion additional revenue worldwide. In order for the whole of the UK economy to benefit, we need to ensure that UK businesses in all sectors understand the relevance of digital applications and services and deploy the best available. The connected digital economy does not stand still we are now experiencing an even greater transformation than we have seen to date, driven by internet-enabled convergence, where content, data, people, businesses and the physical world connect in new ways, to deliver radically new applications, services and experiences. This convergence will disrupt existing value chains even more than applications such as e-commerce have transformed retail; it will lead to innovative new business models and create new global markets. It will also transform the way that societies function, and the way people live, impacting for instance how healthcare is delivered, the running of our cities and transport networks, and our environment. We have yet to see the true power of the connected world. Tim Berners Lee, 2012

THE DATA VALUE CHAIN

In such a landscape, there are many areas CDEC could potentially focus on. They are often seen as either/or choices creative or technology, hardware or software, B2B or B2C (business-to-business or business-toconsumer). We believe in a converging digital economy, in which all areas can be important and connected. To understand and navigate it, we need a map or a value chain across the digital economy rather than a series of either/or decisions. We represent this highly converged connected digital economy in what we call the data value chain (shown below). This recognises the importance of all aspects of the connected digital economy in the context of its relationship with data. This value chain is the field of play for CDEC. We describe below our initial sector and project focus within this data value chain, developing capabilities in a small number of sectors that can then be extended into other sectors. It is important to note, however, that our success depends critically on being aware that the transformative impact of new digital services can only be realised in the context of the whole value chain, so our initial project focus could embrace any aspect of the value chain within the chosen sectors.

Overview of the Connected Digital Economy Catapult

The data value chain

There will be huge growth in the volume and variety of data

This growth will be driven by the generation and collection of vast amounts of new data from myriad new sources: personal or remote sensors contributing to the Internet of Things, smartphones or enterprise servers, content from the creative industry, data from social media, for instance.

Connectivity is becoming more mobile

Data transport and connectivity, through a variety of networks including mobile, fixed and wireless, are also important, with mobile as a key area of growth (mobile internet traffic will account for over 30% of all internet by 2015 if it carries on growing at its present rate). We expect the continual emergence of new waves of innovation in mobile connectivity and its relationship with data both user to device and device to cloud.

New tools can create valuable insights

A wide range of new data science tools and techniques many of which are drawn from mathematics and computer science, including data fusion, cluster analysis, neural networks, predictive modelling, ensemble learning, simulation, genetic algorithms and a wide range of statistical techniques have been developed. These, combined with other techniques to store, curate, integrate and visualise diverse datasets, provide useful insight and knowledge.

Dataset integration will result in exciting new outputs

In turn, this knowledge will create a new generation of innovative and disruptive outputs in the form of services, applications and products. Many of these are the result of mashing data: integrating datasets from different sectors and different sources in a way that gives new insight and value. In the USA, for example, insurance policy data is combined with alerts about extreme weather to warn potentially underinsured people who may be affected.

Substantial value can be unlocked in nearly every sector

The outputs engendered by these remarkable new insights will generate significant value in almost every sector of the UK and global economy, both within single sectors and cross-sectorally. CEBR, for example, estimates that the so-called data equity (the unlocked value in data) will, over the next few years, be worth over 40 billion per year to UK private and public sector businesses.

Overview of the Connected Digital Economy Catapult

Challenges for innovators

CHALLENGES FOR INNOVATORS

As innovators work across this data value chain, there are some clear challenges. Addressing these in a timely fashion would open up unrealised opportunities, conferring what we call fast-mover advantage the most important competitive edge in the digital economy and thereby substantially reducing risk and enhancing the prospects for growth. These challenges, and the corresponding opportunities, define the capabilities that CDEC will need to support innovators.
Innovators can be anyone from individuals to large businesses based in the UK involved in the digital economy. Our primary target innovators are start-ups or SMEs whose capacity for R&D&I is limited and who wish to develop products or services that have a chance of sustained economic value. However, we will also partner with larger companies in our projects to build innovator platforms.

Early movers that secure access to the data necessary to create value are likely to reap the most benefit. McKinsey Global Institute
Challenge 1 Realising the potential of integrated content and data Challenge 2 Exploiting next generation connectivity

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Data is often unstructured, complex and poorly integrated and in an increasingly large variety of formats. Most start-up and SME innovators do not have the time, money or capabilities to link or mash data from different types of sources to realise its value. There is a major opportunity to make available large amounts of pre-integrated and structured data and content from a wide variety of sources. Understanding the economic value trapped within organisations closed data is also important. As the new opportunities emerge, individual innovators are being hindered by delays and tensions caused by the complexity this environment creates for copyright, intellectual property, trust and privacy. A market-wide approach is needed. Challenge 3 Accessing critical skills

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We are in the middle of a wave of fundamental change in mobile connectivity. This is driven by the increase in mobile device capabilities, the emergence of near continuous communications with cloud services and the emergence of the Internet of Things, where billions rather than millions of devices and components with an internet address will be connected, enabling them to communicate in massive sensing systems. Understanding and hands-on experience in how next generation connectivity technologies and data interact (at both the data collection and data consumption stages) requires the opportunity for experimentation and development in representative testbeds. Very few innovators currently have access to these types of future connectivity test environments. Challenge 4 Being heard in a crowded marketplace

Many innovators cannot access skills critical to commercial success, particularly: o rapidly identifying and applying new business models, to commercially exploit the opportunities across the fast-moving data value chain o reducing the risks associated with the security of and trust in their solutions encompassing cybersecurity in large integrated datasets, network and infrastructure security and peoples concerns around trust and private data o delivering products and services that are truly user centred while reducing cost and wasted resources on progressing poor design concepts.

It is difficult for even the best innovators to be effectively heard by business and public sector leaders in a market where over 20,000 UK companies are being formed every year and where many procurement and technology groups can be resistant to the most innovative ideas. These innovators need help in being heard, enabling them to reach their target customers with a louder and clearer voice.

Overview of the Connected Digital Economy Catapult

The CDEC vision and strategy

THE CDEC VISION AND STRATEGY

The digital economy will be a major engine of UK economic growth through the commercialisation of innovation in the sector itself and the impact such innovation will have on all other sectors. Speed to market and fast-mover advantage is key. The CDEC vision is to

Ignite new digital innovations to power sustained economic growth in the UK

In addition to economic growth, we believe that CDECs work will make a major contribution to the cost and effectiveness of UK public service delivery and impact the way we address major societal challenges such as sustainability and the quality of life in an ageing society. To achieve this vision, we will pursue a two-part strategy.

We will accelerate digital innovators from concept to commercialisation by building platforms and capabilities that address the main challenges in the data value chain.
We take a broader view of what a platform is compared to a traditional IT technology architecture definition. A platform in this context can manifest as any combination of technologies, data, products, services, methodologies, interoperability and capabilities. As the OECD observed, platforms are central to the workings of the digital economy: Well-designed platforms function as innovation catalysts facilitating the development of interoperable follow-on technology. The platform model is therefore a key factor in driving huge rates of innovation and growth in the digital economy.

In building these platforms and capabilities, we will always ensure that they are not going to be built in a timely fashion by the market anyway and that they are not a duplication of something that already exists in the market. Over time, these platforms and capabilities will become a substantive and highly valuable retained resource that will act as the foundation for future growth.

We will demonstrate the transformative impact and strategic relevance of digital innovation to UK business and public sector leaders in all sectors.

The digital economy sector is not only itself a major vertical sector but it also enables every other sector in the UK economy. By demonstrating this relevance, we will increase the adoption of innovative digital services, realising more of the value inherent in data. We will tell the digital story in a compelling but neutral way, using the best of UK innovators. We will develop programmes to ensure a healthy flow of business and public sector leaders through the centre. Our strategy addresses the challenges facing innovators:
Innovator challenge Realising the potential of integrated content and data Addressing the challenge We will develop multiple integrated platforms, datasets and software toolkits to analyse, visualise and develop services and products. We will also develop reusable platforms and demonstrators (such as secure trusted data environments) so that organisations can securely share their closed data. We will have wide-ranging skills in areas including data science, rapid application prototyping, cloud services and copyright. We will provide leading-edge communications technology testbeds and demonstrators (both within the London CDEC Innovator Centre and around the UK) to enable the UK SME innovator community to experiment and develop new applications enabled by next generation connectivity.

Exploiting next generation connectivity

Overview of the Connected Digital Economy Catapult

Executing our strategy a ten-point plan

Innovator challenge Accessing critical skills

Addressing the challenge We will build skills and assets to address issues that all innovators face in their quest to develop commercially successful new applications, services and products:

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Being heard in a crowded marketplace

rapid development of new business models cyber-security in large integrated datasets, network and infrastructure security and issues around trust and private data adopting a user-centred approach to developing and delivering new products and services.

We will build an Innovator Centre in London, a key part of which will be a Collaboration and Showcase facility for the very best of UK digital innovators. We will also run programmes to help digital innovators to meet UK and international customers. This will include not only physical events, but also virtual activities using immersive collaboration technologies.

EXECUTING OUR STRATEGY A TEN-POINT PLAN

1 Engaging with our stakeholders
Our partnership development team will lead our continuous engagement, collaboration and alignment with the key digital stakeholders both across the UK industry, universities, research centres and innovation clusters and internationally. A key focus is uncovering, developing and qualifying Innovator Projects. To ensure we are free to pursue the identified opportunities, over five years we will invest nearly 40% of our core funding in these.
Innovator Projects are projects building platforms and capabilities that address the issues affecting the data value chain and are open to wide sets of innovators to use.

Quickstart Innovator Projects are projects that are both quick to build and quick to grow or exit on the basis of how many innovators use the platforms and capabilities. Their rapidity and short timeframe mean that they are always highly relevant to the market and the changing data value chain and will form the majority of our projects. Over time, we believe that many of them will become real needle-movers in the digital economy. Strategic Innovator Projects take longer to build and have larger investment. They may develop from successful Quickstart Innovator Projects or from CDEC taking on larger challenges after significant qualification activity the Digital Copyright Exchange is the first such project we have started to engage with, but others are already emerging. We are planning to do a limited number of these projects. All of our Innovator Projects are selected using detailed project qualification criteria.

2 Initial sector focus

The data value chain impacts all sectors. It is important that the platforms we build are implemented in real environments, so that innovators can develop commercial products and services. We have therefore chosen three sectors that will act as a market context and initial focus for our work. All of these sectors have a number of features in common:

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The UK is successful in these markets. They are growing markets worldwide. They generate rich datasets. They have UK innovator heat.

Overview of the Connected Digital Economy Catapult

Executing our strategy a ten-point plan

! A number of organisations within them have signalled that they would welcome CDEC involvement.
Creative content and media digital platforms accelerating the UKs leadership position Cities as a context lab for data mash-ups and next generation connectivity Digital innovation platforms for health to realise new outcomes

The UK is a world leader across large parts of the value chain, but fortunes depend on embracing the hugely disruptive effects of digital innovation. We will collaborate with multiple organisations and numerous creative and media clusters across the UK to build and resource new digital marketplace innovations.

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Cities are where multiple datasets converge, effectively becoming a lab for data mash-ups. They are also at the frontier of next generation connectivity, with emerging opportunities in machine-to-machine communications, white space and fifth generation mobile. We will collaborate with other Catapults to focus on data and device integration and interoperability; complex data analytics and visualisation technologies, addressing both open and closed data; and citizen engagement and user-centric design.

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The health sector is a rich source of valuable datasets and new sources of data. There is significant potential for cost savings and societal benefit (the potential benefits of using data more effectively in the UK health sector are estimated at over 3 billion per year). As a neutral partner, we will bridge multiple innovation communities.

It is important to note that whilst CDEC is initially focusing on these sectors, every project will continually look at the interfaces between these and other sectors. This is because the most vibrant innovation often happens when data and solutions/services cross over sector boundaries (for instance, between health and retail or between cities and the environment).

3 Building capabilities and skills

CDEC will rapidly build a core team of highly skilled full-time staff to execute and manage projects:

! key technical and creative skills from the fields of data science, security, human factors and user !
interface design, system integration, cloud services, e-commerce, software engineering, business model development, mobile and next generation communications technology, and rapid application prototyping support skills for project delivery, partnership development, communications, business analysis, procurement and project finance.

Our aim is for a 2:1 ratio of outsourced to permanent staff in our projects to keep our skill set fresh and agile, supporting quick entry and exit of projects, depending on the opportunities that arise and how the projects progress.

4 Attracting and developing top talent

CDEC is recruiting skills that are in strong demand, but by offering cutting-edge commercial experience to significant numbers of highly qualified people early in their careers, we will be a major contributor to creating a new generation of the necessary skills. We will run a strong secondment and rotation programme in both academia and industry and through contracting SMEs. From the early work on identifying potential partners, there has been substantial interest expressed in such a programme a number of universities and large corporate organisations have offered to second key personnel and to jointly develop continuous professional development modules.

Overview of the Connected Digital Economy Catapult

Executing our strategy a ten-point plan

5 Demonstrating the transformative impact of digital innovation

During 2014, we will open a circa 20,000 square foot Innovator Centre in London that will act as a new and valuable hub for the UK innovation community. Three distinct areas will house CDEC management, administration and non-project staff; the Project Studio; and the Collaboration and Showcase Studios. The Centre will be complemented by a strong physical and virtual presence around the UK in locations with organisations that share approaches and characteristics with CDEC. The launch of the Innovator Centre will take place over a three-month period during 2014 and involve multiple targeted events tailored for specific sectors, businesses and public sector leaders. The CDEC Project Studio will be a large open-plan space that can be reconfigured and partitioned into project-specific workspaces as required. It will be the home for CDECs project teams, as well as visiting innovators. Alongside the usual desks, workstations and project-specific equipment will be videoconferencing and presence technologies that link teams together. In addition, there will be areas configured for experimental use, both the exploration of new equipment and technologies, and trials of services, applications and devices within mocked-up home and office environments before fully fledged field trials. The Collaboration and Showcase Studios will attract national and international businesses to connect to UK innovators and to connect those innovators with other innovators. We envisage that the Studios will also become an important facility for the whole TSB family demonstrating digital innovations from the other Catapults and bringing digital innovators together with customers from their sectors.

6 Strong voice for UK digital innovation

The success of our plan is dependent on being able to quickly attract partners to give us market insight on what Innovator Projects to engage in, innovators to engage with us on projects and the technology talent to build our team and deliver projects. We plan to create a contemporary high impact digital networked approach to our marketing and communications, inviting in the key voices in the sector. The approach will use continuous dialogue with a wide range of digital leaders and influencers and media channels.

7 Collaborating, not duplicating

The UK has substantial R&D&I capacity and excellence and we will leverage this, rather than duplicate it. Academia and industry also recognise the great opportunity for CDEC to broker, connect and aggregate existing R&D&I capacity. We will do so by collaborating with a number of organisations and developing mechanisms to bring these activities together around strategic agendas and programmes. There are many areas where our focus intersects and complements that of other public sector innovation players. We will continue to work with the most important public sector players, including the Catapults (particularly Future Cities, Transport and Satellite Applications), the Open Data Institute, the TSB, Government departments including BIS, DCMS and IPO, the NHS and the Department of Health, The Research Councils and the European Commission. Our work will also be aligned with the Information Economy Councils recent strategy.

8 Developing alternative sources of funding

The capabilities and skills that we build to deliver our Innovator Projects will become the basis for our development of a sustainable funding stream from collaborative grant funding and carefully selected commercial activities. This will eventually comprise two-thirds of our total funding.

Overview of the Connected Digital Economy Catapult

Executing our strategy a ten-point plan

Collaborative grant-funded income will come from using deep technology skills and facilities and our project-convening skills to lead or sub-contract consortia. The primary sources of grant funding that CDEC will be looking to access are:

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the EC Horizon 2020 programme (20142020) the UKs allocation of EU structural funds (ERDF) for innovation and ICT UK Government departments, including SBRI and infrastructure funding TSB programmes such as Digital, Built Environment, Transport, Health and Satellite programmes, as well as SMART.

We are developing a range of initial carefully selected service offerings from which we plan to generate commercial funding. These include consulting, contract R&D&I, sponsorship and facility hire of the CDEC Innovator Centre in London. The key with all of these services is that they are directly relevant to our focus areas and they directly use and enhance the capabilities we are building to deliver our Innovator Projects.

9 The UK and beyond

Although CDEC, together with its partners, will focus on becoming a strong contributor to the UKs innovation ecosystem, we will also seek to establish an international presence. We will prioritise Europe with a four-point programme:

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at UK level, developing partnerships with organisations that are influential and active in Europe establishing strong links with a small number of flagship European RTO peers building international links with a range of potential industrial and R&D&I collaborators liaising with the European Commission at all levels and becoming an influential voice in EU policy and the Horizon 2020 work programmes.

10 Exceptional management
Strong business functions and processes will ensure effective management of funds, our facilities and assets, our project finance and risk, our reporting and our intellectual property. CDEC will be a company limited by guarantee with a transparent governance structure. It will be controlled by an independent Main Board, which has been selected from industry and academia with significant sector knowledge and experience. Details of the members of the board can be found on the CDEC website. The Management Team, led by the CDEC CEO, will report to the Board. This team will be responsible for the effective operation of CDEC and for developing its business and financial plans. It is worth noting that one role that of the Chief Innovation Officer will be fulfilled as an in-residence position over a tenure of 6 18 months, giving CDEC the opportunity to attract world-class talent for meaningful periods of time. An advisor group comprising representatives from all our different types of stakeholders will provide operational advice on the plans, investments and programmes, as well as thought leadership on wider issues affecting the sector including risks and opportunities. It will be a key channel in keeping CDEC linked to the communities and to enable it to invest in building the best capabilities and assets for the market. The group will have no executive or funding responsibilities. The general principles of IP management are very simple, although they will inevitably become more complex as the variety of CDEC capabilities, collaborative projects and partnering agreements expands. We will manage IP to:

Overview of the Connected Digital Economy Catapult

Achieving success

! be flexible enough to be tailored to the circumstances of partners and business users, large and small ! maximise the development and exploitation of new technology for the benefit of UK industry and
encourage a knowledge of existing third-party IPRs

! avoid the creation of perverse incentives for partners or businesses ! avoid infringing any State Aid rules, ensuring that CDEC maintains no aid status ! avoid creating burdensome costs for small companies and other customers.

ACHIEVING SUCCESS
Our plan is ambitious and our expectations high. Having consulted for two years and listened to many external innovation community and sector specialists since CDEC started in January 2013, we have developed an approach that can make a real difference to innovators in the connected digital economy value chain:

! We will be iterative, agile and collaborative in a fast-changing and dynamic market. This is ! ! !
demonstrated by our plans to convene many Quickstart Innovator Projects that build what the key players in the market say are the platforms and capabilities that will make the greatest difference. We will combine this with a strong discipline and focus. For all our Innovator Projects, we will apply a rigorous and detailed project qualification process. We will take an open innovation and access approach and maximise the reuse of IP for the benefit of the wider innovator community. Where possible, we will follow an open source approach. We will engage closely with the market by investing in a strong partnership and market engagement programme, aligning with the initiatives of other UK digital innovation players. We will also establish international links. We will use our range of Innovator Projects as an ongoing guide to keep our capabilities and skills fresh and to build our engagement, relevancy and reputation with all stakeholders. We will strive to generate income in a way that does not compete with other players in the market.

! ! We will keep a strong focus on measuring our success as we go.

In the five-year horizon, we believe that we can generate 365 million of linked economic value an impact that will be created by a series of ripple effects, initially engaging and supporting innovators, leading to their products being launched and bought, which in turn will result in the benefits of those products (profitability, employment etc.) being realised by customers.

Overview of the Connected Digital Economy Catapult

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