The fine line between academic research and applied industry research? I am working with a university on a research project. This project is a collaboration between industry and academia with the industry being the leaders. It is a computer science project working on an industry's product. The length of the project is one year, and this one year includes time to better formulate the expectations and requirements of the project.

For some background, the industry wanted to adopt some new software engineering patterns for Cloud computing (Kubernetes, Docker, microservices... yada yada) and couldn't find their way around applying these into their product. They were having some serious performance issues and looked to academia for a solution. The academics could find that it is not clear what is going on, but wanted to collaborate and understand as things develop.

Working on this project, I am finding that my greatest contributions on the project focused on identification and correction of a handful of bugs, or why 2-3 configurations could be far better. Many things look like just slight oversights and very trivial items regarding inexperience of using a library. With a constantly changing tech stack and a large software base, I can understand why these things would happen and can understand why nowadays, this would be one of the most relevant software engineering concerns and it should not be a surprise that an industry project ends up, to some degree, in this direction. At the same time, there is not much regarding novel algorithms or novel techniques...

I feel a bit confused because it feels like I'm at the fine line between computer science research and consultancy work. How would one go about presenting such work as research work e.g. to funding bodies? So I was wondering about, and hoping to start a discussion on the validity of such work and its presentation.
My own experience suggests that the academic value can be quite orthogonal to the needs of the business. The company wants to build a product and "ideas" are secondary to that. For the academic, the ideas are at the front. But the work to build and refine the product often gives a researcher ideas that can be developed independent of the product development. Time constraints may require that exploration of those ideas needs to be delayed, but in most cases they can be developed. 

You already suggest one such idea in your question. Keep that idea in your research notebook and develop it as time permits. You may need to abstract it a bit for confidentiality reasons, but you probably want to abstract it in any case to make it more interesting and more general. 

There is no real conflict other than time, assuming that you can present the problems in a sufficiently abstract way that you don't infringe your contractual obligations. 

Spin Off is a big idea. The formal project is a "mine" for ideas. Dig them out.