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Economic impact of materials modelling

Here is the executive summary of a new report on the economic impact of materials modelling, co-authored with Christa Court from MRIGlobal in the framework of the European Materials Modelling Council (EMMC) and the International Materials Modelling Board (IM2B). The full text as well as survey form is available here.

At the core of the report is an industry survey conducted during 2015 that provides corroboration for the indicators of research and development (R&D) process improvements found in earlier studies and new data relevant for quantitative economic analyses.

The survey is set in the context of an outline of metrics and methodologies that can be used to quantify the economic impacts of materials modelling from a variety of perspectives including R&D and industry stakeholders and society at large. At the micro-economic level, performance indicators include financial metrics such as net present value, return on investment (ROI), and internal rate of return. Where sufficient data are available, micro-economic analyses could be extended to a more in depth cost benefit analysis. Finally, macro-economic modelling methodologies can be used to model the wider impacts of the integration of materials modelling into the production function of various industries. Since materials modelling is a potentially disruptive technology, macro-economic impact assessment will likely require dynamic simulation models, which are scenario specific and necessitate someone with a high level of both problem domain knowledge and modelling domain knowledge.

Research impact is reviewed briefly based on bibliometrics, case studies, peer review, and economic analysis [3] using evidence gathered for a previous report [4] as well as the recent UK Research Excellence Framework [5], which includes 15 cases involving materials modelling.

The study also investigates how materials modelling impacts the industrial R&D process and outlines the value and potential of materials modelling for industrial research and innovation, competitiveness, and profitability using examples from materials industries based on recent Integrated Computational Materials Engineering studies and a Computer-Aided Drug Design study, which demonstrated the usefulness of defining a performance metrics for a modelling function in an industrial R&D organisation.

The survey analysis was based on information provided by 29 companies covering a wide range of sizes and industry sectors and an even distribution in terms of types and scales of modelling. The qualitative benefits identified in the responses were categorised into the following Key Performance Indicators: More efficient and targeted exploration; Deeper understanding; Broader exploration; R&D strategy development; Source of property data; Trouble shooting; Performance optimisation; Intellectual property protection; Value chain benefits; Improved communication and collaboration between R&D and production; Upscaling and market introduction as well as marketing benefits.

On a quantitative level about 80% of companies reported innovation accomplishment, 60% cost savings, 35% job creation, and 30% revenue increase due to materials modelling. A wide variety of project sizes are represented, with total materials modelling investment (covering staff, software and hardware) ranging from €45K to €4M (average €1M, median €½M). Staff was the largest cost factor: the ratio of staff costs to the median cost of software and hardware, respectively, is 100/20/6. Cost savings due to the materials modelling project ranged from €100K to €50M (average €12M, median €5M). The ROI, determined by the ratio of revenue generated and investment in modelling, ranged from 2 to 1000. Removing the largest and the smallest values yields an average ROI of 8. A trend for ROI to grow more than linearly with investment in modelling was found.

The economic impact of molecular modelling of chemicals and materials

Here is the executive summary of an extensive report from Goldbeck Consulting which is available here (The economic impact of modelling) or by request from info@goldbeck-consulting.com.

The evidence for economic impact of molecular modelling of chemicals and materials is investigated, including the mechanisms by which impact is achieved and how it is measured.

Broadly following a model of transmission from the research base via industry to the consumer, the impact of modelling can be traced from (a) the authors of theories and models via (b) the users of modelling in science and engineering to (c) the research and development staff that utilise the information in the development of new products that benefit society at large.

The question is addressed to what extent molecular modelling is accepted as a mainstream tool that is useful, practical and accessible. A number of technology trends have contributed to increased applicability and acceptance in recent years, including

  • Much increased capabilities of hardware and software.
  • A convergence of actual technology scales with the scales that can be simulated by molecular modelling as a result of nanotechnology.
  • Improved know-how and a focus in industry on cases where molecular simulation works well.

The acceptance level still varies depending on method and application area, with quantum chemistry methods having the highest level of acceptance, and fields with a strong overlap of requirements and method capabilities such as electronics and catalysis reporting strong impact anecdotally and as measured by the size of the modelling community and the number of patents. The picture is somewhat more mixed in areas such as polymers and chemical engineering that rely more heavily on classical and mesoscale simulation methods.

A quantitative approach is attempted by considering available evidence of impact and transmission throughout the expanding circles of influence from the model author to the end product consumer.  As indicators of the research base and its ability to transfer knowledge, data about the number of publications, their growth and impact relative to other fields are discussed. Patents and the communities of users and interested ‘consumers’ of modelling results, as well as the size and growth of the software industry provide evidence for transmission of impact further into industry and product development. The return on investment due to industrial R&D process improvements is a measure of the contribution to value creation and justifies determining the macroeconomic impact of modelling as a proportion of the impact of related disciplines such as chemistry and high performance computing. Finally the integration of molecular modelling with workflows for engineered and formulated products provides a direct link to the end consumer.

Key evidence gathered in these areas includes:

  • The number of publications in modelling and simulation has been growing more strongly than the science average and has a citation impact considerably above the average.
  • There is preliminary evidence for a strong rise in the number of patents, also as a proportion of the number of patents within the respective fields.
  • The number of people involved with modelling has been growing strongly for more than a decade. A large user community has developed which is different from the original developer community, and there are more people in managerial and director positions with a background in modelling.
  • The software industry has emerged from a ‘hype cycle’ into a phase of sustained growth.
  • There is solid evidence for R&D process improvements that can be achieved by using modelling, with a return of investment in the range of 3:1 to 9:1.
  • The macroeconomic impact has been estimated on the basis of data for the contribution of chemistry research to the UK economy. The preliminary figures suggest a value add equivalent to 1% of GDP.
  • The integration with engineering workflows shows that molecular modelling forms a small but very important part of workflows that have produced very considerable returns on investment.
  • E-infrastructures such as high-throughput modelling, materials informatics systems and high performance computing act as multipliers of impact. Molecular modelling is estimated to account for about 6% of the impact generated from high performance computing.

Finally, a number of existing barriers to impact are discussed including deficiencies in some of the methods, software interoperability, usability and integration issues, the need for databases and informatics tools as well as further education and training. These issues notwithstanding, this review found strong and even quantifiable evidence for the impact of modelling from the research base to economic benefits.

We acknowledge financial support from the University of Cambridge in the production of this report.