The easiest way to innovate is to incrementally improve an existing product or service.
However, what if your industry is changing so fast, that unless something radical or disruptive is being done, your business might be unsustainable or made redundant? Moreover, even with newly developed innovations, how could you go about protecting them from being infringed upon?
ERS Industries, a Singapore home-grown SME, works collaboratively with technology partners to speed up its innovation cycle and develop new product unique selling propositions that meet or exceed market requirement. By employing Computational Fluid Dynamics (CFD) simulation during its product development, ERS was able to become the first Singapore-based data centre server rack manufacturer to do so. Gaining early traction and recognition for its award-winning product, ERS also put considerable effort to reduce business risk by securing its brand and protecting its intellectual property.
The growth of the data centre industry is led primarily by the need to support business IT Operations continuity, high availability, and growing mobile workforce accessibility. With escalating demand for faster data and information processing, data centres are driven to provide more computing power, resulting in higher energy cost mainly in the computer server power consumption and equipment cooling. Left unchecked, data centre operating expenditure can easily spiral out of control.
Server rack manufacturers provide the housing enclosures for clusters of mounted computer servers and electronic equipment used in IT and data centre operations. Traditionally, the manufacturers focus on the mechanical properties of server racks, but as computer servers become more powerful, the enclosed space within the server racks experience higher amount of trapped heat, which has negative implications for the computer server performance and longevity. With more trapped heat, data centres are forced to increase powerful cooling solutions to maintain an acceptable level of equipment performance and lifespan. ERS took this as an opportunity to innovate by addressing these issues.
Established since 1995, ERS has the advantage of understanding the market well, by manufacturing its own server racks and enclosures. Now, by adopting open innovation principles, it has been able to transform its company from a server rack manufacturer into an industry solutions provider. In the process, ERS has learned a considerable amount about IP risk management—in particular, using IP databases to check the IP landscape or avoid infringement, taking the right steps to protect IP when working with external partners, and marking goods with IP rights to deter potential infringers.
Staying ahead of the competition
ERS identified the need to stay ahead of the competition when it realised that the company’s traditional server rack sales were not growing especially since the increased competition from China. To understand the market, and find out where there might be room to innovate, ERS conducted market research, read market trends/foresight reports and used IP database searches.
The company’s research identified that growth was most likely to be found by supporting the trend towards cloud computing and data centres. The only way to find new customers and revenue streams was for the company to develop its IP. As Ng Song How, Corporate Development Director at ERS puts it:
"For our company to survive, standing still was not an option". "We focused on things you can’t see (such as airflow) and on ways to ‘make the invisible visible’. We tested our designs and discovered ways to produce noticeable differences in air flow, enabling our racks to reduce temperatures and make substantial energy savings."
Being able to address heat buildup at the source represents a paradigm shift in the industry, which was previously focused on cooling the whole surrounding data centre environments at a high cost.
Finding room to innovate
The secret to ERS’s designs lies in pioneering the application of Computational Fluid Dynamics (CFD) simulation tools to its server rack design. This way of analysing fluid flows is more commonly found in automotive, aerospace and construction industries, to provide a better understanding of airflow and heat distribution. For ERS, this application allowed them to develop a product with energy savings for their customers of up to 25%, thereby creating a unique selling proposition that can also be proven factually with on-site tests and scientific papers.
The company’s ‘[email protected]’ product incorporating this technology also has an innovative aluminium-extrusion skeletal frame design for increased load handling capability but remaining lightweight than conventional server racks. Spurred on by this initial success, ERS has since continued to develop more innovations for data centre use.
Staying out of trouble
While seeking ways to stay ahead of the competition, it is important to avoid the risk of a new innovation infringing a third party’s IP, which requires appropriate IP searches to be undertaken. Whether the ‘new’ IP is a new potentially patentable solution to a problem, a novel design, a unique trading name/style or original copyright-protected content, it is important to know whether it is genuinely new or whether some other company has thought of the idea before!
Depending on the type of right and the scope of protection, you may not have the rights to use an invention or creation that is not novel. It is always best to know the facts as early as possible before significant sums have been invested in development so that you can decide whether to pursue your current line of activity or re-think it. ERS, therefore, made sure that IP searches were part of its R&D strategy.
IP searches, of course, can also be useful to find solutions that may already exist to a problem. They may add value by negating the need to spend R&D budgets developing an in-house solution.
Spreading the business and IP risk
Once you have a good idea that works, two challenges remain: being able to convince customers that it works and bringing it to market quickly enough to benefit from first-mover advantage.
ERS decided to get help with both aspects using an ‘open innovation’ approach. The business engaged A*STAR (Agency for Science, Technology and Research) to speed up the innovation process and benefit from the sharing of costs and resource, instead of researching and developing everything in-house.
This collaboration not only helped refine ERS’s solution but also backed up the benefits of its approach with academic research that could be used to influence the market. Ian Goh, Group Business Development Director at ERS, explains:
"This route gave us results for our Computation Fluid Dynamics (CFD) tests. It’s not cheap to run CFD tests and a typical rack maker probably wouldn’t do them. We worked with A*STAR’s Institute of High Performance Computing to measure the heat within the rack environment. In fact, we did about 30 iterations of the tests there to make sure our results were really robust!"
Using IP to protect future sales
To cement the first-mover advantage, and reduce the risk of imitation, it is important to investigate whether an invention can be protected using registered IP rights. Patents, and other IP rights such as trade marks, copyright, designs and trade secrets, can act as a barrier to competition and help to maximise revenue created through product sales.
ERS decided it was worthwhile obtaining a patent and has filed for protection. However, mindful of the risk of imitation, the company has taken professional advice on how much should be disclosed within its patent application:
"We keep some of our proprietary data and information as a trade secret."
ERS also manages commercial risks by using non-disclosure agreements and appropriate confidentiality clauses in employee and third-party contracts.
Making a mark
ERS has also taken steps to protect its company name and product name by way of registered trade marks, taking time to identify what classes of goods and/or services and territories to protect. ERS now features its brand name prominently on its racks as well as its marketing materials, to put others on notice that the mark is protected, and to encourage customer loyalty. As well as being easier to enforce against imitators than an unregistered mark, trade mark registration can help the owner in any dealings with customs authorities that may be necessary to stop infringing imports or exports in the territory of registration.
Developing the business and its IP portfolio has required management focus and patience, but ERS believes it is now reaping the rewards of its proactive approach to innovation. It also has the satisfaction of winning awards. Song How summarises the position as follows:
"Previously, we were just focusing on survival. It took time to find the right partners, develop solutions and conduct tests before people started to recognise our name and believe in us. It was only then we focussed on branding and marketing; now, our name is recognised, as well as our technology solutions."
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