In Japan, where labor shortages are a concern, digital transformation is being emphasized in all industrial fields.
DX (Digital Transformation) is attracting attention . Many companies are working to promote DX in order to survive the competition in a changing society.
However, it is also true that there are issues such as a lack of understanding of DX.
This time, we will introduce the benefits of promoting DX, appropriate steps, and specific examples.
Table of Contents
- Why is DX promotion required?
- Definition of DX by the Ministry of Economy, Trade and Industry
- 2025 wall
- What DX promotion brings
- Advantages of promoting DX
- Streamlining operations/Improving productivity
- Increase revenue by creating new value
- Current status of DX in Japanese companies
- Issues in promoting DX
- Lack of management understanding of DX
- Shortage of DX human resources
- Complicated legacy system
- How to proceed with DX | 7 steps from posting a vision to evaluation
- (1) Display of management strategy and vision
- (2) Get consent from top management
- (3) Creating a system for promoting DX
- ④ Visualization and analysis of the current situation
- ⑤ Digitization of business
- (6) Digitization of business models
- ⑦ Process evaluation and review
- Four points for promoting DX
- Development of DX human resources
- Coordination between departments and expansion to the entire company
- Consider the value chain from the user (consumer) perspective
- embrace a partnership
- Examples of DX promotion
- Toyota | Digitization of sales system
- Fujitsu｜Reducing Postal Costs
- Starbucks | Introduction of mobile app
- [Must-see for beginners] Recommended books related to DX
- The easiest DX textbook
- DX through illustrations and diagrams ~Industries growing explosively with digital technology, industries being destroyed~
Why is DX promotion required?
Definition of DX by the Ministry of Economy, Trade and Industry
In 2018, the Ministry of Economy, Trade and Industry of Japan issued the ” Guidelines for Promoting Digital Transformation (DX Promotion Guidelines) ” and defined DX in the business scene as follows.
|“Companies can respond to drastic changes in the business environment, utilize data and digital technology, and transform their products, services, and business models , reform the corporate culture and climate, and establish a competitive advantage.”|
In order for a company to survive in a competitive society, it is necessary to respond to social changes and use the power of digital technology to create new value.
In the “DX report” released by the Ministry of Economy, Trade and Industry on September 7, 2018, the word ” 2025 cliff ” was used to warn against the IT system infrastructure of Japanese companies. It has become a center of attention.
The “2025 cliff” is a word that expresses that Japan will suffer an economic loss of up to 12 trillion yen annually after 2025 due to the lack of progress in DX . The content of the existing system, which was the foundation of the company, becomes complicated, outdated, and black boxed, causing delays in international competition and stagnation of the Japanese economy.
On the other hand, if DX is realized, it is said that it is possible to boost the real GDP to more than 130 trillion yen in 2025-2030.
What DX promotion brings
There are two things that companies aim to achieve through the promotion of DX. These transformations give companies a competitive edge .
|( 1 ) Utilize digital technology to transform products, services, and business models.
( 2 ) Utilize digital technology to transform operations and the organization itself.
The promotion of DX is an initiative that companies should implement because it will lead to increased competitiveness against competitors.
Advantages of promoting DX
Streamlining operations/Improving productivity
With the introduction of DX, system maintenance costs and wasted labor are eliminated, resulting in cost reductions and efficiency improvements . In addition, it can be expected to improve the productivity of companies by streamlining and automating operations .
Increase revenue by creating new value
If organizations are transformed through the process of DX and new business services are created, companies may be able to build new revenue bases.
In addition, high-precision analysis using data expands customer needs and convenience, and by pursuing “ease of use” of services, businesses and services have characteristics different from their original forms, creating new value. connected to.
In this article , we will introduce the benefits of introducing DX in detail, so if you are interested, please take a look.
Current status of DX in Japanese companies
According to the 2019 IPA “Survey on the Functions and Roles of Digital Transformation Promotion Human Resources”, about one-third of companies used the term DX internally.
Regarding the effects of DX, up to 30% of the companies answered that even the easiest to work on, “improving productivity by streamlining operations,” had some effect.
While the word DX is attracting attention, there are many companies that are not working on promoting DX. In addition, we can see the current situation that many companies are suffering from not being able to obtain the effects of their efforts.
For those who want to know the challenges of DX in Japan, please also see this article.
Issues in promoting DX
Lack of management understanding of DX
In order for a company to promote DX, the consent of the management is required. However, due to lack of knowledge about DX and understanding of the necessity of DX, there are cases where it is difficult to obtain consent to revamp a company with DX .
Let’s understand the necessity of DX not only for those directly involved in promoting DX, but also for the entire company.
Shortage of DX human resources
DX human resources represent human resources who understand the importance of data, appropriately combine it with digital technology, and are able to make efforts to transform the company, and are necessary for companies to promote DX.
However, according to the Information-technology Promotion Agency (IPA), an independent administrative agency, which conducted the “Survey on the Functions and Roles of Human Resources to Promote Digital Transformation” (May 17, 2019),
|Overall, the most common answer for all types of human resources was that they were “greatly in short supply,” suggesting that there is a strong sense of a shortage of human resources who will be responsible for promoting DX.|
From this result, it can be seen that securing and training DX human resources is a future issue.
Complicated legacy system
Legacy systems refer to outdated mission-critical systems used by many Japanese companies. The old system has become a black box (a state in which the internal structure cannot be understood) due to exaggeration and complexity.
As a result, there is a lack of flexibility and mobility, making it difficult to operate the latest technology .
In addition, there are cases where cooperation with existing systems does not go well, and the introduction of DX does not progress or becomes even more complicated.
(1) Display of management strategy and vision
In order to promote DX, it is necessary to have a management strategy and vision that asks , “Why are we working on DX?” Instead of aiming at DX , think of DX as a means to achieve a goal .
In a changing society, it is important to create and share specific goals, such as “what to aim for with DX,” in order to create new value that enhances competitiveness .
(2) Get consent from top management
DX can also bring about major changes in companies themselves. In order to promote fundamental reforms, the understanding and consent of management is necessary. With the realization of DX, even when developing a new business, the consent of the management will be required, so management will also be required to understand the necessity of DX.
(3) Creating a system for promoting DX
Let’s build an organizational structure that can continue to promote DX . It is necessary to have a system that can smoothly implement the following cycle.
|(1) Create a hypothesis → (2) Implement measures → (3) Verify using data|
It is also important to secure and develop human resources responsible for DX, and to build a coordinated organizational operation system.
④ Visualization and analysis of the current situation
Visualize and analyze the current state of your own system, such as an existing complicated system, and improve it. By grasping the current situation such as “Is the system coordinated?”, it becomes clear whether the current system needs to be reviewed. Ideally, the system should be coordinated so that data can be utilized across the board.
⑤ Digitization of business
Digitize your analog business. The use of digital technology, such as the active introduction of web applications and cloud services, will lead to more efficient operations and reduced costs.
Once the digitization of business progresses, digitize the business flow of the entire organization (a flow that shows the business process in an easy-to-understand manner) and work on improving the existing business .
(6) Digitization of business models
By incorporating digital technology into existing businesses, new profits and value can be expected to be created. If a new business model is realized, there will also be a possibility of conversion to a new business.
⑦ Process evaluation and review
To promote DX, it is important to evaluate and review the process on a regular basis. Evaluate the progress of DX and its effects, and repeatedly review and improve the process in order to realize DX more efficiently.
Four points for promoting DX
Development of DX human resources
In order to promote DX, many engineers and management personnel are required, and human resources who are responsible for DX are indispensable. However, there is a shortage of DX human resources, and it is difficult to secure enough DX human resources .
Therefore, local governments will need to develop DX human resources, such as deepening the staff’s knowledge of DX.
Coordination between departments and expansion to the entire company
There are some cases where the introduction of DX is limited to some departments and the company as a whole has not been able to implement DX . It takes a lot of time and effort to transform a company by introducing DX.
First of all, understand the situation of your company and work on small measures. The surest way to proceed is to gradually expand the scope. Let’s build a cross-sectional system such as cooperation between departments and aim to realize DX company-wide.
Consider the value chain from the user (consumer) perspective
The key to establishing competitive advantage is to remember the user (consumer) perspective .
Even if business is streamlined by promoting DX, if it does not feel value from the perspective of the end user (the person who ultimately uses the product or service), the company cannot continue to be selected by the end user. you can’t.
A value chain is a framework that can be used for this purpose.
|A value chain is a series of business activities such as raw material and parts procurement activities, product manufacturing and product processing, shipping and delivery, marketing, sales to customers, and after-sales service. It is a way of thinking to capture as a chain of.|
Quote: Value Chain (Bizhint)
By considering how each business (function) within the company creates value for end users, it is possible to transform into a corporate entity that continues to be chosen by users.
embrace a partnership
Openness is just as important as the user’s perspective in promoting DX. By combining not only our own resources but also partnering with external partners, we will be able to combine our resources and establish a further competitive advantage.
By understanding your company’s strengths and flexibly activating external initiatives, you can implement your DX strategy in a more scalable manner.
In this article, we explain in detail what is necessary to promote DX and the challenges of promoting DX, so if you are interested, please take a look.
Examples of DX promotion
Toyota | Digitization of sales system
Toyota Motor Corporation has linked its on-prem core system and cloud-based CRM (customer management system) with “Salesforce,” enabling cross-sectional utilization of customer information.
Fujitsu｜Reducing Postal Costs
In collaboration with A*Quantum, Fujitsu worked on optimizing the delivery service at Japan Post’s Shin-Iwatsuki Post Office in Saitama Prefecture.
It seems that the route that minimizes the transportation cost was calculated using data using a new technology that solves combinatorial optimization problems inspired by quantum computing at high speed.
This has made it possible to reduce the number of flights from 52 to 48 compared to the conventional method.
Starbucks | Introduction of mobile app
Starbucks is introducing a mobile app that uses reinforcement learning technology. Recommended products are recommended against the inventory of the nearest store, fixed-term products, user’s order history, etc.
[Must-see for beginners] Recommended books related to DX
The easiest DX textbook
He explains the knowledge and actions necessary for DX from the basics such as “What is DX?” It is easy to understand using diagrams.
DX through illustrations and diagrams ~Industries growing explosively with digital technology, industries being destroyed~
You can learn the basics of DX and business models in the digital age, and it is also introduced as one of the books recommended by the Japan Society for Innovation Fusion.
The introduction of DX brings benefits to companies, such as improved productivity and the creation of new value through streamlining operations. In order to increase competitiveness in a changing society, it is necessary for companies to promote DX.
However, while DX is attracting attention, there are few companies that have achieved success with DX. Companies need to steadily promote DX according to appropriate procedures.
Understand existing systems and issues, and aim to realize DX by referring to the seven steps and examples introduced this time.