Table of Contents
- Progress of DX in Japan, which is said to be an underdeveloped country
- Japan is a digital underdeveloped country
- The reason why Japan is an underdeveloped country in DX
- Issues for Japan to escape from DX underdeveloped countries
- The spread of DX in Japan and the future
- What is the impact of DX promotion on Japan?
- Advantages of promoting DX in Japan
- Disadvantages of promoting DX in Japan
- Differences between countries where DX is developing and Japan
- financial infrastructure
- Temperature difference in DX acceptability by generation
- Japanese government’s DX initiatives
- DX initiatives of Japanese companies
- toyota motor
- Nippon Kotsu
- How Japan can catch up with developed countries with DX
Progress of DX in Japan, which is said to be an underdeveloped country
Various DX promotions are being carried out overseas, and there are many examples. However, it is said that Japan lags behind other countries in promoting DX .
Why is Japan inferior to other countries?
Japan is a digital underdeveloped country
According to the “World Digital Competitiveness Ranking 2020” announced by IMD, Japan is a digitally underdeveloped country and ranks 27th in the world. This ranking shows how actively governments and businesses are using digital technology.
Knowledge (know-how in developing and understanding new technologies), technology (the overall environment that enables the development of digital technology), and future readiness (degree of readiness to take advantage of digital transformation) are evaluation indicators. It is an item.
First in the ranking is the United States, where education and research and development are highly evaluated, and citizen participation in e-government is progressing rapidly. Many Asian countries and regions are also listed at the top, including Singapore, Hong Kong, South Korea, Taiwan, and China.
On the other hand, Japan is ranked 27th in the world. The reason why Japan has become a digitally backward country is related to the response to the new coronavirus infection.
If the Japanese government promotes DX, there is a possibility that Japanese companies will promote DX further. What is the reason why Japanese companies are currently slow to promote DX?
The reason why Japan is an underdeveloped country in DX
There are three main reasons why Japan is an underdeveloped country in DX.
- Ambiguity of management strategy
The first reason is the ambiguity of management strategy .
If the management gives instructions such as “Can you do something using AI” without specific instructions on how to transform the business, the people in the organization will not be able to realize the needs of the management. Repeat the verification of
However, there are some cases where ambiguous management strategies do not lead to business transformation and are wasted.
- Shortage of IT personnel
The second reason is the lack of IT personnel . In promoting DX, we cannot move forward without people who are familiar with IT.
Technological change and diversification make it difficult to keep that resource in-house. Currently, the scheme of entrusting system construction and maintenance to vendor companies has become commonplace, and the current situation is that the human resources necessary to promote DX have disappeared.
In addition, there is also a serious problem that the number of human resources who understand the specifications of existing systems is decreasing due to retirement age.
It is said that more than 70% of IT human resources in Japan belong to vendor companies. From a global perspective, this figure is actually an abnormal number. Approximately 70% of IT personnel in the United States and more than 50% in the United Kingdom and France belong to user companies.
Japanese companies should hire IT personnel in-house and train them to have high IT skills, instead of leaving IT to vendor companies.
- Aging system
Finally, aging systems are to blame.
About 80% of Japanese companies have outdated systems. In addition, 70% of companies feel that the aging system is a hindrance to DX.
Having an aging system causes many problems. An easy-to-understand example is the black box of the system and the maintenance and operation cost that rises year by year.
It is necessary to change the system according to the transition of business, but there is no choice but to make a whack-a-mole renovation. As a result, we are creating a vicious cycle of further black boxing.
In addition to this, the low success rate of DX and the lack of investment in IT are also possible causes.
Issues for Japan to escape from DX underdeveloped countries
The Ministry of Economy, Trade and Industry has compiled DX promotion guidelines. In order to quickly advance DX, we will focus on current issues related to IT systems in realizing DX and countermeasures against them, from major issues in implementing DX in the future. and created a DX report.
In response to the points pointed out in the DX Report, these guidelines clarify the matters that management should refrain from in realizing DX and building the IT system that will serve as its foundation. It is intended to be something that can be used to check
Let’s encourage the use of these guidelines and promote DX promotion by promoting cooperation with other related measures so as to contribute to DX efforts at each company
The spread of DX in Japan and the future
The wall of 2025 is approaching. The wall of 2025 is a warning bell that the existing IT systems used in the operations of many companies will become obsolete and unusable unless the Ministry of Economy, Trade and Industry announces in the DX report that DX is promoted. It means that
If we cannot promote DX by 2025, we will suffer a huge economic loss. Therefore, it is necessary to popularize DX by 2025.
What is the impact of DX promotion on Japan?
Introducing the advantages and disadvantages of promoting DX.
Advantages of promoting DX in Japan
The advantage of promoting DX is that it can improve operational efficiency .
With DX, operations are more accurate and work time is reduced. In addition, you will avoid time for other tasks, which will encourage further growth.
One of the benefits is the elimination of labor shortages and cost reductions through improved operational efficiency . By improving the efficiency of operations, it shortens the work time and leads to the reduction of labor costs.
Disadvantages of promoting DX in Japan
The disadvantage of promoting DX is the initial cost . In most cases, it is necessary to expand IT tools in order to tackle digital transformation.
The introduction of tools incurs initial costs and running costs. Also, since it may take some time for the effect to appear, you have to be prepared for the running cost until then.
For management, this will be a major challenge. If it is a large company, there is no need to worry, but small and medium-sized companies should carefully consider whether to introduce the system with a large amount of money.
Differences between countries where DX is developing and Japan
We will compare and introduce DX advanced country China and underdeveloped country Japan .
In the past 10 years, China has achieved rapid development, also known as the “leapfrog phenomenon,” and has emerged as an advanced DX country. The leapfrog phenomenon refers to the rapid spread of new services in emerging countries with underdeveloped infrastructure at a speed unimaginable in developed countries.
Compared to China, which grew rapidly, in Japan, smartphones spread through the stages of landline phones → handsets → mobile phones. In India and South America, where the penetration rate of landline phones was originally low, smartphones are spreading at a tremendous rate.
From here, you can see that there are parts where Japan has not been able to ride the momentum. There are two reasons for this disparity.
Thanks to its financial infrastructure , China is experiencing phenomenal growth in the DX space. Since the 1960s, credit cards such as bank and Diners Club cards have become popular in Japan.
However, in 2002, China’s first electronic payment network, China UnionPay, was established by the People’s Bank of China. Founded 40 years after Japan, UnionPay has grown to become the world’s second largest credit card brand after VISA.
Temperature difference in DX acceptability by generation
In China and Japan, there is a temperature difference in acceptance of DX by generation .
Japan has the highest aging rate in the world, and the ratio of working-age people to the total population is well below the average of OECD member countries. The ownership rate of smartphones is increasing regardless of age, but there are many generations who feel resistance to DX.
On the other hand, in China, not only the digital native generation that grew up with digital devices, but also the elderly are making a significant contribution to digital consumption, with more than half of the “silver age” people having experience of online shopping. It is clear that there is a difference in the degree of acceptance of DX between the two countries
Japanese government’s DX initiatives
The Tokyo Metropolitan Government is in the pre-start stage of DX initiatives . The fight against the new coronavirus infectious disease clearly reflects the structural challenges facing Japan’s society, such as the delay in digital transformation.
Using the promotion of DX as a lever, we will strongly promote the “structural reform of metropolitan government” that goes back to the roots of systems and mechanisms, and by improving the QOS (Quality of Service: the quality of services provided on the Internet) of the metropolitan government, We will improve the quality of life (QOL) of people and realize a society where everyone can enjoy safety, peace of mind and happiness.
From fiscal 2025, we aim to build a foundation for “digital government and the Tokyo Metropolitan Government”, and we will boldly transform the way the current work is carried out, the staff themselves, and the organization of the Tokyo Metropolitan Government. In the 2040s, we aim to complete the “vision” of Tokyo.
DX initiatives of Japanese companies
This time, we will introduce the DX initiatives of the following three companies.
- toyota motor
- Nippon Kotsu
What kind of DX initiatives is Toyota Motor Corporation, which is called ” Toyota of the World ” , doing?
Toyota Motor Corporation announced on September 16 that it will establish a new company with the Dentsu Group for the purpose of reforming marketing and launching new businesses. A new holding company was established in which Toyota invests 66% and Dentsu Group 34%, and the new company that promotes DX with Toyota Conic Pro Co., Ltd., an advertising agency affiliated with Toyota.
In September, Toyota, the Dentsu Group, and Delphis formed a capital and business alliance, including a third-party allotment of shares by Delphis to the Dentsu Group. Going forward, after obtaining approval from the competition law authorities of each country, the Dentsu Group plans to invest in Delphis and start operations in January 2021
“Nihon Kotsu Co., Ltd.”, which operates a taxi business, has realized DX by developing an AI-based vehicle dispatch prediction system “AI dispatch”.
Nihon Kotsu was unable to grasp the changing demand for taxis depending on the time of year and region, and was unable to properly dispatch taxis. Therefore, using AI, we developed a system that can analyze various data such as transportation status (accidents, delays, etc.), various event information, weather information, area, time, etc., so that taxi demand forecasts can be optimized. Did.
As a result, we will be able to allocate vehicles appropriately for each region, and we will succeed in improving the operating rate. In addition, by providing customers with the taxi dispatch app “GO”, it is now possible to dispatch a taxi simply by specifying the boarding location and taxi company on the app, which has also improved customer satisfaction. .
Kindle is Amazon’s e-book service. In recent years, we have seen more and more people reading e-books instead of buying paper books.
As times change, common sense changes. The more pages a book has, the heavier the paper book becomes.
On the other hand, you don’t have to worry about the weight of the kindle. Kindle is a DX service that is currently attracting attention, such as being available for purchase 24 hours a day and being cheaper than paper books.
How Japan can catch up with developed countries with DX
A survey by JEITA and IDC Japan is investigating the status of Japanese companies’ efforts toward DX.
As a result, 33.4% of all companies in Japan answered that they were not working on DX or did not know about DX. On the other hand, only 3.6% of companies in the US did not work on DX or did not know about DX.
Although Japanese companies have accelerated their efforts on DX due to the impact of COVID-19, it has become clear that there is a large gap in the ratio of DX efforts compared to US companies. In addition, there is a big difference in the awareness of DX between Japanese companies and overseas companies.
Compared to overseas companies, Japanese companies have a lower awareness of IT investment at the organizational level, and the percentage of top management directly involved in DX is low. Therefore, we should raise the awareness of DX and focus on DX efforts throughout the country, regardless of companies’ conversion to DX.
In this article, we introduced the fact that Japan’s DX promotion is behind schedule, along with the advantages and disadvantages of promoting DX.
In order for Japan to escape from being a DX underdeveloped country, it is important to refer to the efforts of advanced countries such as China and the United States. Focusing on the causes and issues, let’s focus on the future of DX in Japan.