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After a 23-year career at SAP Japan that culminated in his serving as company President, Yuzuru Fukuda took on his current role in April of 2020 as CIO and Deputy CDXO (Chief Digital Transformation Officer) at Fujitsu, Japan’s largest information and communications technology and services provider with more than $30 billion in annual revenue.

Fukuda-san and I have frequently discussed in public forums the role of IT and digitization in making Japanese companies more globally competitive. I sat down with Fukuda-san to get the latest on Fujitsu’s great redesign and his view on the state of digital transformation in Japan.

Yasu: It’s been about a year and a half since you joined Fujitsu from SAP. You’ve spoken about the Fujitsu Transformation initiative previously. Could you share with our readers the progress you’re making?

Yuzuru: I would love to. As you may know, Fujitsu Transformation is not just about deploying the cloud and digitizing everything. It’s about redesigning Fujitsu and establishing our competitive advantage. Apple may become a car manufacturer. Tesla may compete with electricity companies. Toyota is building cities. IT companies like Fujitsu need to evolve and redesign themselves as well.

What’s truly remarkable about Fujitsu is that our employees are religiously customer-focused. They will do anything for our customers. This can be both good and bad, of course. But it is our core. Where we’re changing is how we create value for our customers. Keep in mind Fujitsu used to be a “monozukuri” company, a maker of hardware, which we supplemented with services.

We’ve of course turned this model on its head. We’re now shifting to becoming a services company. But obviously we need to do more than provide services. Our customers are asking us to help transform their business as well as build new ones. They’re often starting from a clean slate. We’d like to guide them. We need to redesign Fujitsu for a world without RFPs. We need to ideate, as well as integrate. Sustainability is increasingly important to our customers as well.

Sustainability. Trust. Innovation.

Yasu: How are you securing buy-in from your employees in your new direction? This is where many companies stumble…

Yuzuru: Indeed. We’re all about leading with a sense of purpose. Sustainability is key for us. Trust is essential. As is innovation. We’re currently in the process of engaging all 130,000 of our employees, beginning with senior management, so they can openly share their individual sense of purpose for working in the IT industry and at Fujitsu. We call this initiative “Purpose Carving” and we’re taking a “Top First” approach. I myself host an internal radio show every week to foster greater openness and communication among employees!

I’m delighted to say they’re responding positively. The number of employees who feel the company is changing in a real way was 24% in June of 2021. It’s currently 42%. My goal is to take us to over 60%.

Balancing global and “genba”

Yasu: What role do cloud solutions play in Fujitsu’s transformation?

Yuzuru: The cloud for us is all about speed. It’s about achieving rapid time to value. Cloud solutions are a key part of our overall operational strategy. We’re simplifying our operations, and we’re becoming more global and data-driven.

But we also want to empower our front lines, the “genba,” so they can focus on the customer and have a sense of ownership and purpose. We want all our employees to participate in the company’s transformation and success.

Yasu: Are other Japanese companies pursuing a similar model?

Yuzuru: In terms of their cloud usage, some are more disciplined than others about standardizing across their businesses. Overall, though, Japanese companies are looking to balance globalism with the Japanese genba-oriented way of doing things. Call it Japanese-style digital transformation. Call it “glocalism.” The intent is to be both global and local.

Bringing systems development in-house

Yasu: As you know, Japanese companies differ from global companies in that they outsource most of their development work to SIers. Is this changing? Are Japanese companies bringing more of their systems development in-house?

Yuzuru: Great question. I do think the shift toward in-sourcing is real, and that it will continue to gather momentum, especially among larger, more progressive Japanese companies.

One of the impediments to bringing development in-house, I believe, has been the relatively low status of IT departments within companies, although this is also changing with the pandemic elevating and accelerating the need for digitization.

Glocalism, revisited

Yasu: What advice would you give global cloud companies looking to do business in Japan?

Yuzuru: They need to put themselves in the market and understand local behaviors that are reflected in business processes. They need to understand what is unique about Japan.

I’m not pounding my chest about what’s great about Japan. I’m being open and fair. Some processes should change. But some are obviously desirable. Japan is different from the U.S., just as the UK is different from France and France is different from Germany.

Global cloud companies need to be glocal in their thinking as well, just as their customers need to figure out for themselves what they should keep and what they should do away with. Or how they might optimize existing practices with global features. Enabling this balance is essential.

When I was at SAP, I took executives from Germany to a major supermarket chain so they could see for themselves how Japanese housewives rode their bicycles to the market every day to shop for fresh fish and produce. In Japan, wholesalers play an important role in ensuring the timely, fresh delivery of these products.

It took me five years to persuade the development organization back in Germany to build an order management module that accommodated Japan’s distribution system. It turned out that this module could be used in China and Korea as well. This shouldn’t have taken five years.

In addition, partnering is essential for global cloud vendors. Japanese companies the size of Fujitsu need 30 to 40 solutions to function, and they all need to be integrated. They also need to be customized to a certain degree.

At the risk of sounding self-interested, it’s imperative that cloud companies partner with local service providers to build their implementation capacity, and to build credibility with customers as well.

Transformation, globalization, innovation – and action

Yasu: Finally, what keeps you up at night?

Yuzuru: My biggest worry is that we don’t put our sense of purpose into action. Japanese companies don’t have a very good track record when it comes to driving transformation, globalization and innovation. We’ve been painfully slow.

But the pandemic has, without a doubt, accelerated positive change in Japan. We’re moving in the right direction on all fronts at a rapid pace. Japanese companies are becoming more open and global by the day.

This presents a huge opportunity for Fujitsu and Japan’s IT industry as well as the world’s cloud innovators. We need to redesign ourselves. We need to act. We need to keep up the momentum. There really is no finish line to digital transformation.