R&D Tax Incentive for Industry 4.0 | Software Development Case Study


Research and Development (R&D) Tax Incentive for Industry 4.0 | Software Development Case Study

Data is a huge component of Industry 4.0. As a society we are constantly generating data – transactional data, machine data, social data. In 2021 alone, it is estimated that approximately 79 zettabytes (or 79 billion terabytes) of data was generated[1]. As more and more data is generated, we have the ability to glean insights that have previously been unavailable. The ability to analyse huge datasets has historically been limited by the compute power of your on-premise infrastructure. The shift from on-premise to cloud computing has been instrumental in enabling the processing, computation, and analysis of data.

On-premise computing requires businesses to own and manage their own computing power. This typically includes investing in expensive equipment and software and employees or contractors to develop, maintain, and continually improve the environment. The initial costs of setting up on-premise computing is expensive and requires continuous maintenance costs in the form of person-hours, equipment upgrades, and license costs. Due to the high barrier to entry, many companies did not have the on-premise computing power that is now available on demand with cloud computing.

The shift to cloud computing removes a significant amount of the initial capital investment and ongoing maintenance costs of on-premise computing. Cloud computing solutions like Amazon Web Services and Microsoft Azure are fully managed cloud solutions – meaning companies do not have to purchase, install, manage, and upgrade on-premise hardware. Businesses that shift from on-premise to cloud computing adjust their expenditure behaviour from a capex model to opex model.

Cloud computing offers elastic computing resources that scale dynamically to meet demand levels while charging for only the compute resources actually consumed. Cloud computing also provides access to cutting edge services like artificial intelligence, machine learning, containers, managed blockchain, serverless computing, and cloud native applications. Companies that could not afford to install and manage on-premise computing infrastructure can now access cloud computing resources, which has opened the door to facilitating the next level software developments.

Personalised Content 

Spotify users are constantly being recommended new music based on their previous listening habits. When logging into Netflix, users have a curated list of show and movie recommendations based on historic usage.

How are companies able to curate constant lists of personal recommendations? It’s all about the data.

Spotify tracks everything – artists, genre, lyrics, listening history, skipped songs, repeated songs, downloaded music, created playlists and over 256 other traits per song. The collected data is stored and analysed based on your personal listening behaviours, other listeners’ behaviour, and external trends. Over the years, Spotify has acquired companies based on their technical specialisations including music intelligence, data science and analytics, and audio detection. The combination of the huge amounts of tracked data and technical expertise allows Spotify to create its personal recommendation system[2].

In 2016 Spotify transitioned from its own data centres to Google Cloud’s global network. The transition to the cloud has enabled Spotify to develop new features and functionalities more quickly based on data insights and machine learning. Having the computing infrastructure managed by Google Cloud enables Spotify to focus more on providing its users with a high-quality listening experience[3]. Without the shift to cloud computing, it is highly likely that Spotify’s development speed would have decreased as significant resources would have been dedicated to maintaining its on-premise infrastructure.

Facial Recognition

If you have a smartphone, there is a good chance facial recognition is a part of your everyday life. Your phone automatically unlocks and you can log into apps with a single glance. Facial recognition relies on biometric technology that pinpoints and measures facial features from an image and compares it to a database of faces. It is commonly used for identity verification and security purposes.

India deployed facial recognition technology to identify missing children. India’s Ministry of Women and Child Development created TrackChild – an online database of photos and information of missing and found children that can be shared between citizens, police, and agencies.

There were too many missing and found children on TrackChild for anyone to manually review photographs and identify children. In response, Bachpan Bachao Andolan, a child rights’ organisation, used facial recognition algorithms to automatically compare photos in the TrackChild database. Within the first four days of implementing the facial recognition algorithms, photos of 45,000 children were analysed and 2,930 children were identified[4].

Using facial recognition technology goes far beyond simply unlocking a smartphone. It is being used to identify people across many industries – retail, airports, sporting events, forensics and more. Facial recognition takes a significant amount of compute resources which means cloud computing resources remove significant barriers to entry for new applications moving forward.

The transition from on-premise to cloud computing has lowered the barrier to entry for new developments and applications. New technologies and methodologies are constantly being developed, combined, and extrapolated upon. Further advancement in software development will continue to shape society and drive innovation forward with data enriched information.

How R&D Tax Incentive helps in Industry 4.0? 

While Industry 4.0 technologies will provide financial benefits in the long run, the initial investment outlay can be quite costly.  The Research & Development Tax Incentive (RDTI) can potentially alleviate some of the cost burdens in the short term.  Companies whose investments in Industry 4.0 technologies align with the eligibility criteria outlined by the RDTI can use the tax incentive to help with short term cash flow.

DOWNLOAD r&d industry specific paper: software development

If your company is investing in Industry 4.0, it is important to determine if your investment in new technologies will qualify for the RDTI.  Azure Group’s Grant specialists are available to evaluate RDTI potential and guide your company through the application process while minimising business interruptions so you and your team can focus on what you do best. Get in touch.
download r&d tax incentive | DOCUMENTATION
Related: Industry 4.0 | Why it matters & How you apply R&D

Have you noticed our #FridayExpertTips... here's one that relates to #R&D
"The costs of innovation can be offset by the R&D Tax Incentive. It doesn’t matter if you’re in a lab, on a factory floor, or behind a computer – innovation is innovation! Talk to our team!"

[1] https://firstsiteguide.com/big-data-stats/
[2] https://towardsdatascience.com/uncovering-how-the-spotify-algorithm-works-4d3c021ebc0
[3] https://cloud.google.com/customers/spotify
[4] https://www.globalcitizen.org/fr/content/missing-children-found-india/

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Azure Group
Azure Group

Azure Group is the leading Chartered Accounting, Business Advisory and Strategic Advisory firm supporting the growth & success of fast growing entrepreneurial businesses.

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