Takahito Tokita
Representative Director
CEO Message from the CEO

In fiscal 2023, the Fujitsu Group clarified its direction toward medium- to long-term value creation and the realization of Our Purpose through the following three points. First, we answered the question of “What sort of company does Fujitsu want to become?” by unveiling our vision for 2030: being a technology company that realizes net positive through digital services and expressing this vision both internally and externally. Second, after organizing social issues looking toward 2030, we identified the main priorities for the Group as our Materiality, and developed a framework for providing value to society through our business. Third, backcasting from our vision for 2030, we formulated and launched the 2023-2025 Medium-Term Management Plan (medium-term plan).

The medium-term plan covers a three-year period building a business model for sustainable growth and improved profitability with a view to 2030 and beyond, preparing us for a leap forward from fiscal 2026. Our goal is to shift from a business model that primarily focuses on traditional labor-intensive system integration to one that provides high added value to customers through cloud-based digital services.

Our results for fiscal 2023, the first year under the medium-term plan, demonstrate that we are making progress on transforming our business model. The Fujitsu Uvance business, which will play a leading role in driving the Group’s growth, exceeded expectations with an 84% year-on-year increase in revenue. We expect continued growth in fiscal 2024, along with deeper confidence in establishing a new business model for the Group. We are also focusing on modernization, which means helping customers optimize their IT infrastructure with the latest technologies and new products and services so they can transform their business models by utilizing data. Customers tend to take a cautious approach toward IT asset optimization because it affects the very foundations of their business. As a result, growth in this market is somewhat slower than anticipated. Even so, in fiscal 2023 we reinforced our structure, which included an increase in headcount, and upgraded our tools to meet the robust demand we expect going forward. We plan to leverage these enhanced resources to take advantage of the market’s expansion from fiscal 2024.

The 2.0 percentage point improvement in gross profit margin for the Service Solutions segment, which we position as a growth area, is evidence of success in our shift towards a more profitability-focused business model. This improvement is attributable to delivery transformation initiatives such as standardization and automation of development processes, leveraging Global Delivery Centers (GDCs), and value pricing, which have contributed to enhanced profitability.

On the other hand, frankly speaking, we are only midway along the path to making our overseas business more profitable. We have already completed structural reforms in the Americas. Using this region as a leading model, we are accelerating our business portfolio transformation in Europe to improve profitability and considering reforms in the Asia Pacific region.

We take the matter relating to the post office in the United Kingdom, a core part of the Europe region, extremely seriously. The Group’s involvement in this matter is deeply regrettable and we recognize our moral responsibility. The Group is cooperating fully with the statutory investigation in the United Kingdom, and will disclose information to stakeholders as appropriate after the outcome of the investigation.

In fiscal 2023, growth of the Service Solutions segment outpaced the market, and key non-financial indicators such as Customer Net Promoter Score (NPS®)*1 also improved. On this basis, we might say that management is performing well. However, I am by no means satisfied with the status quo. I believe that the Group’s transformation will accelerate only when all of its business divisions take on the challenge of achieving higher levels of performance, and when we have greater collaboration among business divisions and between business and corporate divisions.

This is the thinking behind the high financial targets in our plan for fiscal 2023. We fell short of the planned targets in some areas, which is grounds for reflection. I consider it my responsibility as a manager to set goals that encourage all employees to take on challenges and grow, and then to achieve these goals to meet the expectations and earn the trust of shareholders, investors, and other stakeholders.

*1 Net Promoter®, NPS®, NPS Prism®, and the images and symbols used in connection with NPS are registered trademarks of Bain & Company, Fred Reichheld, and NICE Systems, Inc.

Even so, I am confident about the Group’s medium to long-term growth. We are outlining a business vision that looks to 2030 and even beyond—to a point in the longer-term future after society has become carbon neutral. We have formulated a growth strategy considering what services are required to get to that point, what technologies are necessary, and what human capital is required to offer them. We are making steady progress toward realizing this strategy, and we are demonstrating the Group’s competitive advantages in the process.

One of the Group’s competitive advantages is technological expertise. We have been researching artificial intelligence (AI) since the 1980s, and have integrated the results of this research into Fujitsu Uvance and its practical application as a service that customers can actually use. For instance, in June 2024 we announced several generative AI technologies, including the specialized automatic generative AI tailored to corporate needs utilizing the world’s first technology. Highlighting our R&D capabilities involving cutting-edge technologies, in October 2023 we unveiled development of a 64-qubit superconducting quantum computer offering service through a platform that can be linked to a quantum simulator. We are also making steady R&D progress on a next-generation, high-performance, power-saving processor tentatively dubbed the FUJITSU-MONAKA.

Another notable competitive advantage is our customer base and positioning in the Japanese market. The Group maintains the top share of the IT services market and has established a dominant position in the domestic market for the development and manufacture of mainframes and UNIX servers. Although this is now referred to as “legacy” hardware, the relationships of trust with customers and deep understanding of their businesses we have built through the construction and operation of mission-critical systems have lasting value. These relationships are important because they prepare the ground for new proposals. The responsibility to support the digital transformation (DX) of long-time customers through our hardware and systems integration business and the potential for offering new value through sustainability transformation (SX) are major business opportunities for the Group.

The Group’s extremely robust alliances with global IT companies are due in part to their high regard for these competitive advantages. Even global companies with strong platforms and solutions can find it difficult to deliver that value in a way that benefits customers in Japan. This is where the Group’s expertise comes into play: developing advanced applications that leverage platforms and implementing proposals and solutions that address customers’ business challenges. The Group’s combination of technical capabilities, customer base, and market positioning make it a unique match for alliance partners seeking to provide IT services in the Japanese market.

I mentioned that Fujitsu Uvance, a business model that is geared toward structural changes in society and industry, is gaining customer acceptance, which is producing strong results. This success is due in part to our approach—we invited our customers’ management teams to the Fujitsu Uvance experience space at our headquarters to view demonstrations—as well as to the fact that we now have a full menu of service offerings. That said, I honestly believe this rollout was a year late, based on our assumptions when we announced Fujitsu Uvance in 2021. To translate our competitive advantages into medium- and long-term growth, we need to step up the pace of change. With consulting services that are integral to customer negotiations now in full swing under the new Uvance Wayfinders brand, and with an increased variety of offerings, in fiscal 2024 we will accelerate the transformation of our business portfolio centered on Fujitsu Uvance.

AI is also key to increasing the value Fujitsu Uvance provides to customers. We believe that by 2030, a company’s competitiveness will depend on the integration of AI into its business processes. Accordingly, we need to step up our investment in growth, especially in AI. We need to put AI and other technologies to practical use more quickly. We will integrate our proprietary technology into Fujitsu Uvance to add value to our customers, differentiate our services, and aim for the top position in AI-related services for the Japanese market.

We will accelerate our business portfolio transformation and continue to improve system quality, which is a cornerstone of customer trust. Under the lead of the CQO (Chief Quality Officer), the Group has continuously reviewed and promoted measures to enhance system quality. Of course, we also need to use data to explain to customers how our initiatives are enhancing quality. We welcome honest feedback from customers and society as well as suggestions on areas we need to improve. I believe this is how a technology company should fulfill its responsibility to continuously strive for quality that meets customers’ expectations.

The Group is promoting the core OneFujitsu program in its quest for data-driven management. In addition to OneCRM, which has been operating in all regions since April 2022, OneERP+, the Group’s backbone system, will go live in October 2024 starting in Japan. This system will further augment the real-time visualization of business operations, which we have already partially achieved. It will also enhance the ease of system maintenance and operation, and our response capability and the speed with which we address changes in the environment through system updates and revisions. More than anything, we look forward to increasing productivity through further progress in standardizing the business processes we have been working on under the OneFujitsu program.

The benefits of the OneFujitsu program go beyond the Group’s own productivity gains. The experience and knowledge acquired through our internal practices serve as a reference for our customers and help strengthen our consulting capabilities, which is a key focus for the Group. In particular, we have gained valuable practical knowledge through the Group’s trial-and-error process of introducing 3S: SAP, ServiceNow, and Salesforce.*2 In addition to the technology needed to implement 3S, we have gained extremely broad-based knowledge, such as in how to make the most of 3S, how to adjust business processes to take advantage of them, and how to cultivate the personnel who use them in corporate divisions, such as accounting and human resources, and in front office sales division. I am convinced that by taking up the challenge of DX to move away from legacy systems and by utilizing the practical knowledge we have gained by repeatedly overcoming obstacles, we can outshine our competitors in providing consulting services that are more responsive to customers’ issues and needs.

*2 A business application that encapsulates enterprise resource management (ERP), customer service management (CSM), and customer relationship management (CRM)

The Group has positioned its three-year medium-term plan as a period of preparation to launch on a growth trajectory from 2026. The forward-looking reinforcement of management functions is part of this preparation. To this end, in April 2024 we put in place a new management leadership structure composed of five vice presidents, as well as myself. The aim is to further increase management efficiency and speed up decision-making by delineation according to function.

In addition to the CFO, who specializes in finance, and the CTO, who is responsible for accelerating the commercialization of technology, we have clarified functional responsibility in the Service Solutions segment, which is a growth area. We have assigned three vice presidents to handle the individual functions of consulting, Fujitsu Uvance, and modernization. We believe this arrangement will enable us to change course more swiftly, as fluctuations in the business environment necessitate. The team of five will work together as a team, while also engaging in robust debate, toward the common goal of transforming the Group, which is a massive entity with more than 120,000 employees.

We must continue to embrace the challenge of creating value and achieving medium- to long-term growth. “Net positive,” a phrase used in our vision for 2030, expresses this belief. The outcomes of the Group’s business activities are not unfailingly positive. For example, the spread of cloud services has caused power consumption to rise. We believe, however, that we should wholeheartedly embrace businesses that help society and generate overall positive value that outweighs negative impacts. If we stop taking on challenges for fear of repercussions, in addition to neglecting one of the most important tenets of the Fujitsu Way, we will be left behind in a rapidly changing society and be unable to achieve Our Purpose.

Since becoming president, we hold town hall meetings for employees to entrench these ideas throughout the Group. To truly internalize these concepts, though, employees need to embrace them in their work. As a leader, I need to set high goals while clearly outlining a growth strategy, and continue to encourage behavioral change among employees. I believe our employees will come to realize the importance of challenges that contribute to net positive while taking action to achieve our goals and discovering and solving problems independently as we promote our growth strategy toward 2030.

The Group will continue its transformation toward 2030. We will persevere in our efforts to address global environmental problems, develop a digital society, and improve people’s well-being. We aim to create a positive impact on society as a whole and sustainably enhance corporate value. We expect to realize Our Purpose as the culmination of these efforts. I encourage our stakeholders to follow Fujitsu’s developments with interest.