Adding New Value to Current Strengths Using ICT--A Digital Transformation Driven by Oracle and Fujitsu

[Fujitsu Forum 2016 Conference Report]

Fujitsu Forum 2016 was held for two days on May 19 and 20 at the Tokyo International Forum in Yurakucho, Tokyo. On May 19, Fujitsu held a conference titled "Adding New Value to Current Strengths using ICT—A Digital Transformation Driven by Oracle and Fujitsu." The conference consisted of two parts. The first part was a presentation by Tango Matsumoto, Corporate Executive Officer, EVP, Fujitsu, and Mr. Hiroshige Sugihara, Representative Executive Officer, President & CEO, Oracle Corporation Japan, and the second part was a panel discussion with Fujitsu customers and partners.

Advanced Case Studies of Further Accelerating Digital Transformation

First to the podium was Matsumoto from Fujitsu, who said, "Incorporating digital technologies into core processes of business and society will bring about a very significant transformation, which is now shifting to the implementation phase," and introduced three case studies of digital transformation that helped to create a new business, develop a sophisticated marketing strategy, and improve user experience.

He introduced a case study involving Leopalace21 Corporation to explain the creation of a new business. Leopalace21 installed solar power systems on the roofs of rental properties that are under its management across Japan. By combining it with Fujitsu's monitoring system leveraging the Internet of Things (IoT) and cloud services, the company developed a new business model called the Roof Mega Solar Project to generate clean power while earning additional revenue. At present, the number of buildings the company has installed with solar power generators has increased to 4,500.

Next, he presented a case study of Nikkei Business Publications, Inc. (Nikkei BP) as an example of how Fujitsu can help to develop a sophisticated marketing strategy. Nikkei BP accumulated massive amounts of untapped valuable data on their customers, which they acquired when customers subscribe to specialized magazines, join the company's digital media as members, or sign up for seminars. However, the data was managed by different systems, so the company was unable to utilize these data to create a highly accurate list of prospective customers in a short time. Fujitsu made it possible to integrate customer lists that had been separately managed, which enabled Nikkei BP to send advertisements based on the history of each individual's activity. With this, the company acquired twice the number of specialized magazine subscriptions compared to the past.

For improving user experience, Mr. Matsumoto presented a case study of Kawasaki City in Kanagawa Prefecture. Fujitsu worked with Kawasaki City to test Asao Kosodate (childcare) Portal, a child-care support application, as a new information transmission mechanism using open data. Used in combination with a smartphone's map application, it provides information on facilities for changing diapers, childcare-related events, or other useful information for childcare. More than 90% of users with children under the age of one liked the portal and in April, Fujitsu started offering this service as Kawasaki Application, which also provides disaster prevention information, using Fujitsu's location-information cloud service SPATIOWL.(*)

*SPATIOWL
A service that utilizes a large amount of location-based data gathered from sensors, the Internet, information on people and facilities, etc., to provide a new value.

Matsumoto listed eight main fields of Proof of Concept (PoC) and Proof of Business (PoB) projects that Fujitsu is working on with its customers: Customer Analysis/Marketing, Transportation/Disaster countermeasure, Traceability, Smart Factory, Personal Safety/Security (senior citizens/children), Smart Agriculture, Facility and Equipment Maintenance, and Retail Analytics. He said that in these fields, digital transformation has been progressing using the most advanced ICT technologies, such as cloud, mobile, big data, IoT, and AI. However, he added that Fujitsu is also getting feedback from customers that their digital transformation is not making much progress, which he illustrated with market data. He pointed out the three challenges to digital transformation: time and cost, human resources and skills, and compatibility with the current system, which will be discussed further in the panel discussion before concluding his presentation.

How Oracle Transitioned to a Cloud Computing Company

Next on the podium was Mr. Sugihara from Oracle Japan, who started his presentation by saying, "Two years ago, Oracle announced its vision, 'Contribute to Society as the Top Cloud Computing Company,' and now Oracle will change to a cloud computing company from a database company." He then explained the meaning behind the slogan of Oracle "POCO."

POCO stands for "Power of Cloud by Oracle," which is a concept for achieving agility, TCO, ease-of-use, security, and safety. He stated that their focus on the cloud business is showing its effect under this slogan, emphasizing, "Oracle's revenue from SaaS and PaaS in the third quarter of FY2015 in the global market increased by 61% year-on-year with the number of customers reaching more than 11,000 companies for SaaS and more than 5,000 companies for PaaS. Oracle Japan's revenue from SaaS and PaaS also increased by 53% year-on-year, and new orders for SaaS and PaaS rose significantly by approximately 10 times."

As one of the features of POCO, Mr. Sugihara introduced the wide coverage of Oracle Cloud Software as a Service. He said, "For example, your marketing, sales, e-commerce, services, CPQ (Configure, Price, Quote), and social needs can be covered by CX Cloud, while global personnel, organization management, talent management, and remuneration management can be covered by HCM Cloud. In addition, financial management, project portfolio, procurement management, EPM, financial reports, manufacturing, asset management, value chain implementation, product value chain, and value chain planning can be covered by ERP/EPM Cloud."

For the company's direction going forward, he stated, "Oracle will aim to provide mission-critical cloud services by setting six goals: cost, reliability, performance, security, compatibility, and industry standard." After that, he also remarked on the relationship of more than 30 years between Oracle and Fujitsu, saying that both companies have long been collaborating in mission-critical fields, particularly in the field of security—which has drawn much attention recently and which the two companies have a vast experience in—and are able to provide cloud services as manufacturing companies for products ranging from chips to hardware.

The relationship of both companies has been continuing worldwide, and they are working on more than 6,000 projects per year together in Japan. "We have walked together so far. We would like to continue working together to make Japan a sustainable society in the future as well," he said, and concluded his presentation.

Challenges in Achieving Digital Transformation

After the presentations, Fujitsu welcomed Akihiko Nakamura, General Manager, R&D Strategy Department, OPTEX Co., Ltd., Soichiro Shuto, Executive Officer, General Manager, HCM Cloud Business Unit, Cloud Application Business Unit, Oracle Corporation Japan, Shinji Taketsume, Manager, PaaS Business Promotion Office, Cloud Technology Business Unit, Oracle Corporation Japan, and Chiseki Sagawa, Member of the Board, Fujitsu Laboratories, to join the panel discussion. Tango Matsumoto, Corporate Executive Officer, EVP, Fujitsu, served as moderator.

The discussion led by Matsumoto focused mainly on the three challenges faced in achieving digital transformation that he mentioned in his presentation early on: time and cost, human resources and skills, and compatibility with current systems.

With regard to time and cost, Mr. Nakamura first explained, "OPTEX is a manufacturer of sensing technologies that has won a large market share in the area of sensors for crime prevention and automatic doors in the world. OPTEX worked on the new field of water quality testing together with Fujitsu. In the past, sensor hardware was the only thing of value that we could provide to customers. Providing value-added services on our own would take a considerable amount of time and money—and that's without counting hardware development—so it would have been difficult to do so alone." He continued, "Now we are able to provide sensors with a data collection function as a value-added service thanks to Fujitsu's IoT platform, which allowed us to save time and cost."

Mr. Taketsume presented a case study of Burger King that used the Oracle Cloud Platform. He explained that when Burger King received a request from the Finance Ministry of Brazil to complete the electronic invoicing of direct taxes, they were able to start operations in just three days, or 28 actual working hours, and achieved a 60% headcount reduction and a 50% reduction in total cost of ownership (TCO) by using the Oracle Cloud Platform.

Sagawa then introduced Fujitsu's internal practices. Fujitsu has been working to migrate all the internal systems (approximately 640 systems and 13,000 servers) of the Fujitsu Group both in Japan and abroad to the next-generation cloud platform, aiming to reduce TCO by approximately 35 billion yen in five years. He said, "Fujitsu will compile the development know-how that the company has acquired in the process into a reference document and provide it to customers."

Importance of Digital Business Platform

To address the next challenge of human resources and skills, Mr. Shuto introduced a case study of Macy's and its implementation of an omni-channel strategy. Macy's is a time-honored company with 158 years of history and 870 stores across the United States. The total number of employment and reemployment amounted to 200,000. Oracle worked to maximize customer experience value, improve productivity by standardizing operation processes, and secure and develop human resources to implement the omni-channel strategy.

As a result, the operation processes were reduced from 2,000 to less than 200, and the human resource information was provided to business leaders to improve operations, which digitalized 40 to 60% of operations related to human resources. Macy's converted implicit knowledge on human resources and skills stored in the minds of their employees into digital data and made it available as management resources. According to Macy's, this shortened the training period and the lead-time to deploy human resources to actual work sites.

With regard to compatibility with current systems, Mr. Taketsume pointed out that "compatibility with the customer information system is important." He also said, "Digital transformation is a fight against time, so we need to quickly integrate what we have now."

In conclusion, Matsumoto summarized the panel discussion by saying, "In tackling the new challenge of digital transformation, it is very important to respond to changes while taking into account time and cost. In particular, since we cannot turn back time, we think one way to address this challenge is to use a platform equipped with solutions that can flexibly respond to changes, and Fujitsu's role is to work together with customers to build a mechanism that allows them to bring their unique value to the platform.

As for human resources, it is not only IT talents that are required, but it is also necessary to review processes when we transform all human resources for the new digital world. Now companies that provide corporate services are also required to provide customer experience (CX) and user experience (UX) and consider the end users of their customers. They need to discuss with their customers how to evaluate and guarantee the value of their services. It is also important to define the type of human resources required, which will change with time. To do so, it is necessary to create a mechanism to support human activities.

Ensuring compatibility with the current system is a common issue for us. Synchronizing basic data is the first step to ensuring that the processes will not be affected while the order of priority can be identified by considering them from the viewpoint of users. We would like to continue to create good products in collaboration with customers as our business partners as well. Lastly, as a company providing ICT services, Fujitsu needs to work hand in hand with customers. Digital transformation can be scary, but it is meaningful to society and human life, and what is required is reliability and fairness."

Presenters
  • Tango Matsumoto Corporate Executive Officer
    EVP
    Fujitsu Limited

  • Hiroshige Sugihara Representative Executive Officer
    President & CEO
    Oracle Corporation Japan

Panelists
  • Akihiko Nakamura General Manager, R&D Strategy Department
    OPTEX Co., Ltd.

  • Soichiro Shuto Executive Officer, General Manager, HCM Cloud Business Unit
    Cloud Application Business Unit
    Oracle Corporation Japan

  • Shinji Taketsume Manager, PaaS Business Promotion Office
    Cloud Technology Business Unit
    Oracle Corporation Japan

  • Chiseki Sagawa Member of the Board
    Fujitsu Laboratories Ltd.

Moderator
  • Tango Matsumoto Corporate Executive Officer
    EVP
    Fujitsu Limited