Message from the CEO
By achieving “growth with scale,” we will complete the transformation of the Fujitsu Group’s business model and take on the challenge of creating new value.
Moving our evolutionary stage forward
The Fujitsu Group is in the midst of the process of building a new business model that goes beyond the conventional business model. I see Fujitsu Uvance , launched in 2021, as a bridgehead for this. We are determined to establish Fujitsu Uvance not only as a new brand but also as an embodiment of the future business model of the Fujitsu Group.
In June 2019, the Fujitsu Group declared its intention to become a “digital transformation (DX) company.” By doing so, we wanted to share with our stakeholders the business direction that the Group would take; one that measures up to the future of the IT services business, which is undergoing dynamic change.
Above all, we believe that in order to realize Our Purpose of “making the world more sustainable by building trust in society through innovation,” we need to go beyond the traditional system integration (SI) business and create new value based on the criteria of “Aspiration,” “Trust,” and “Empathy,” which are the foundational values of the Fujitsu Way. Since then, we have been working to transform our business portfolio, and ourselves.
Through the deployment of Fujitsu Uvance, which is the culmination of these efforts, we will raise the stage of the Fujitsu Group’s evolution to a new level.
Demonstrating the future of the Fujitsu Group’s business model
To start with, just what is Fujitsu Uvance? Simply put, it is a new brand for a group of services with which the Group can competitively provide value toward the realization of a more sustainable world. Specifically, the brand consists of seven Key Focus Areas, encompassing four cross-industry Vertical areas that solve societal issues, and three technology-based Horizontal areas that support these Vertical areas. We plan to expand services in each of these Key Focus Areas and strengthen our delivery system, with full-scale deployment planned for 2023.
I envision that Fujitsu Uvance, which starts with societal issues and develops services as One Fujitsu on a global scale, will replace the traditional SI business and become the mainstay of the Fujitsu Group’s business in the medium term. This is why I stated at the outset that Fujitsu Uvance is not simply a new service brand, but that it is intended to be a new business model for the Group. To realize this vision, we are currently focusing our energies on creating not only the offerings within our services, but also a global organizational management structure that encompasses the service development processes and reporting line within the organization.
Making sustainability our core business
Addressing sustainability issues is not a philanthropic contribution to society, but an indispensable challenge if we wish to remain at the forefront of value creation and to seize major business opportunities. The fact that sustainability is essential to the continuous enhancement of the Group’s corporate value is clearly indicated in Our Purpose. This means that sustainability must be set as a core objective of the business from the outset, not as an “add-on.” Fujitsu Uvance’s clear commitment to sustainability is based on this idea.
I believe that for us to be successful and achieve Our Purpose in competitively innovating, and rapidly evolving sustainability-related business, we must develop a certain willingness to exercise power. Let us consider the creation of a carbon-neutral society, or more specifically, the creation of a supply chain to expand the use of alternative energy sources to replace conventional fossil fuels, as one example. To build a supply chain efficiently and quickly, it is essential to create an ecosystem that transcends industry boundaries. What is required here is the will to connect with various companies and public institutions and to use the influence of the ecosystem that has been formed. We need to collaborate with influential partners with whom we can generate synergies, quickly create best practices and disseminate information on their significance, and take part in rule-making in the international community. The willingness to exercise power refers to the ability to see the future of society from a big-picture perspective and to lead the move toward its realization.
The Fujitsu Group is engaged in field trials and collaborations with various stakeholders, including our customers, to realize DX. We must expand these efforts to a scale that will have an impact on society, and not stay content with standalone projects. We will keep on leveraging the Fujitsu Group’s strengths to pursue maximum impact.
I envision that Fujitsu Uvance,
which starts with societal issues
and develops services as
One Fujitsu on a global scale,
will replace the traditional
SI business and become
the mainstay of
the Fujitsu Group’s business in
the medium term.
Realizing scale through expansion of global business
Prior to Fujitsu Uvance, we had been aiming to achieve Our Purpose through value creation and internal transformation in the two business domains of “For Growth” and “For Stability.” “For Growth” represents the domain in which we take on the challenge of creating new value and achieving growth as a partner to our customers. Specifically, we realize the modernization of customers’ existing IT systems centered on their migration to the cloud, and the resolution of management issues through the use of digital technology and data. In the “For Stability” domain, we create value by contributing to improving our customers’ management efficiency by developing IT infrastructure and supporting its stable operation.
Specifically, we provide conventional system integration services that include the maintenance and operation of IT systems and the provision of related products.
As yardsticks for value creation in the two business domains of “For Growth” and “For Stability,” the Fujitsu Group has set financial targets of ¥3.2 trillion*1 in revenue, a 10% operating profit margin for the Technology Solutions business segment by the close of the fiscal year ending March 31, 2023, and a compound annual growth rate (CAGR) of 12% for EPS. In addition, we have set numerical targets for three non-financial indicators that reflect trusting relationships with stakeholders and progress in internal transformation: Customer Net Promoter ScoreSM (NPS®),*2 employee engagement, and DX Promotion Indices.
In terms of value creation in the two domains of “For Growth” and “For Stability,” we view our performance in the fiscal year ended March 31, 2022 as falling short of the expectations of our stakeholders. Although we achieved an increase in profit on a Groupwide consolidated basis, the breakdown of this increase shows that the Technology Solutions segment, the core business that is designed to drive the Group’s growth, experienced declines in both sales and profit, and the Device Solutions segment, a non-core business, filled the gap. Certainly, there were external factors affecting sales and costs, such as disruptions in the global supply chain, and particularly delays in the procurement of semiconductors. However, in terms of demonstrating a shift in the Fujitsu Group’s business model, the results were not enough. In particular, we consider an operating profit margin of 10% one of the prerequisites for developing a globally competitive business. Achieving it, therefore, is a priority for the fiscal year ending March 31, 2023.
As discussed next, at the level of specific measures and initiatives, there has been a lot of progress and the seeds of success are growing. However, I believe that “growth with scale” is essential for the Fujitsu Group to complete the transformation of our business model; and growth with scale necessarily involves expansion of global business. That is why we are focusing on Fujitsu Uvance—because we expect it to be a breakthrough for achieving medium- to long-term global business growth.
- *1In April 2022, we revised the previous revenue target for the fiscal year ending March 31, 2023 of ¥3.5 trillion to ¥3.2 trillion.
- *2Net Promoter® and NPS Prism® are registered trademarks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld, and Net Promoter SystemSM and Net Promoter ScoreSM are service marks of Bain & Company, Inc., Satmetrix Systems, Inc., and Fred Reichheld.
Progress on “For Growth” and “For Stability” initiatives to realize Our Purpose
Fujitsu Uvance is built on the progress we have made since 2020 in the two business domains of “For Growth” and “For Stability.” In this section, I will report on the specifics of each of the four initiatives.
The first strategic initiative is the reformation of our global business strategy . With business restructuring on track, we achieved profitability in all regions for the fiscal year ended March 31, 2022. In addition, the progress made in organizing and expanding services to be promoted in all regions—that is, global offerings—led to the establishment of Fujitsu Uvance.
Furthermore, in April 2022, we reorganized our organization from a six-region structure to a four-region structure (Japan, Europe, the Americas, and Asia Pacific) , which will allow us to execute our strategies more rapidly.
The second initiative is to strengthen our issue resolution capabilities in Japan. Fujitsu Japan has begun full-scale operations and is steadily transitioning from conventional services catering to the needs of individual customers to solution-based business, despite facing a difficult situation in which the company’s main targets—medium-sized companies, local governments, and educational and medical institutions—were particularly affected by COVID-19. In addition, as a measure toward strengthening the consulting function, we completed the reskilling of 8,000 employees in domestic sales to become “business producers,” and visually mapping their skills.
Our third initiative is to contribute to the greater stability of our customers’ businesses. We are strengthening the use of data and AI to improve quality in conventional SI business and prevent projects from becoming unprofitable. We also established a Global Information Security Unit and raised the level of information security under the lead of the Chief Information Security Officer (CISO). Japan Global Gateway (JGG) , which holds the key to improving productivity in the domestic business, now hosts approximately 7,500 engineers and has standardized its service delivery model. The Global Delivery Centers (GDCs) , which develop and deliver services that cover all time zones of the world, now have 20,000 employees and stand ready for further utilization.
Our fourth initiative is becoming our customers’ DX partner of choice. Under the banner of “customer success,” we are strengthening our services focusing on solving customers’ business issues and creating new value, which we pursue in the “For Growth” domain. To accelerate this effort, we reorganized our organization and established the Global Customer Success Business Group in April 2022. In parallel, Ridgelinez, established as a subsidiary dedicated to consulting services, is steadily gaining ground by advancing business activities and human resource policies that are not bound by the existing framework of the Fujitsu Group.
Progress on internal transformation
We are also moving forward with our own reforms, based on the three pillars of “data-driven management,” “DX talent development and productivity improvement,” and “fully participatory, ecosystem-based DX promotion.”
The data-driven management that we are pursuing under the name of the One Fujitsu Program is dramatically changing the management systems that support the Fujitsu Group’s global operations. First, OneCRM, which integrates information on customer relations, was launched in all regions in April 2022. The progress of all ongoing business activities around the world can now be visualized in real time, and orders and sales can be predicted not only for the quarter but for a longer period. This project heralds our goal of future-oriented management, in which we make decisions based on data-driven predictions. OneERP+, which integrates information on all assets essential for corporate management, including human resources and capital, was launched in the UK and Ireland in April 2022, with plans to gradually expand to all regions in the future.
The DX talent development for employees is also rapidly moving forward. In April 2022, job-based human resource management in Japan, previously applied only to executives, was extended to the 45,000 domestic Group employees, crossing a major hurdle toward establishing a globally unified HR system. In addition, as a result of expanding the internal job posting (internal recruitment) system , which allows employees to take on another internal job of their own volition, approximately 2,700 employees had been transferred or reassigned by the end of March 2022, increasing the mobility of human resources within the Group. To support our people taking on challenges and assist their career development, we have also introduced programs such as Fujitsu Learning EXperience, which encourages the acquisition of new skills and knowledge by all employees. Furthermore, we have also expanded our “Self-Produce Support System” to support employees seeking career course redirection outside the Fujitsu Group.
The Groupwide project called Fujitsu Transformation, or “Fujitra ,” which promotes DX with the participation of all employees with an ecosystem-based approach, is also making headway in standardizing operations at all levels of the Group organization. In April 2022, we established a non-financial task force that embarked on an initiative to use data to demonstrate how the non-financial indicators relate to financial indicators, as well as to demonstrate what GRB (Global Responsible Business) and other efforts do to effect changes in non-financial indicators. This project will be a touchstone for our DX, given that the realization of management transformation through the use of data is the very high road of the business that the Fujitsu Group is aiming for.
A truly purpose-driven
organization is one in which
employees spontaneously take
on the challenge of creating
value by thinking outside
the existing business framework.
I believe that the motivation for
such thinking comes from
the realization that change leads to growth.
Internal change must not be a “flash in the pan”
“Work Life Shift ” systematizes the transformation of human resource management and the development of working environments and systems for employees and has attracted a great deal of interest from external stakeholders. It has also been instrumental in fostering a sense of expectation that “Fujitsu will change” among employees in Japan, who have been the primary target of the program. I caution, however, that these internal transformations must not end as a one-off.
A truly purpose-driven organization is one in which employees spontaneously take on the challenge of creating value by thinking outside the existing business framework. I believe that the motivation for such thinking comes from the realization that change leads to growth.
From this perspective, I am looking forward to finding out the correlation between the aforementioned non-financial indicators and financial indicators. I want to prove to our employees, in the form of visible data, that the efforts of each and every one lead to changes in non-financial indicators, and that changes in non-financial indicators in turn lead to the business growth of the Group. I believe that a real sense of contributing to the Fujitsu Group’s growth, backed by data, will be the driving force behind ongoing change.
We have repeatedly been reminded over the past year that unpredictable changes, such as the disruptions in the supply chain caused by COVID-19 and the crisis in Ukraine, can actually turn into reality. Obviously, it is important to create a system that responds flexibly and quickly to change, but what I have become acutely aware of is the need to see beyond the surface of the changes that have occurred and discern their meaning. Moreover, the importance of the role that IT infrastructure and services play in the debate surrounding economic security has also come into the spotlight, and we see firsthand the growing influence of politics and economics on business. Against this backdrop, discerning the meaning of change has become increasingly important in global management.
Fujitsu Uvance, devoted to the creation of new value that contributes to global sustainability, is a breakthrough that will allow the Fujitsu Group to accelerate its global business development while enhancing such discerning abilities. We look forward to your continued support as we take on the challenge of realizing a more sustainable world through digital innovation, while keeping a close eye on changes in society.