With the outbreak of the COVID-19 pandemic, 2020 marked an unstable year for the global economy. On top of its negative economic effects, including increased pressure on healthcare systems, repeated recessions and a crumbling tourism industry, the COVID-19 crisis also served as a great accelerator for change. Digital adoption, for example, saw an unprecedented increase, as e-commerce and digital communication channels multiplied their number of users. Can you tell us what has been the impact of COVID-19 on Fujitsu, and what mid- to long-term structural changes did it serve to accelerate?
Without a doubt, COVID-19 has had a significant impact worldwide. It has turned lives upside down and caused people to rethink their daily routines, which has impacted businesses too. On a positive note, it has also accelerated changes, including the march towards a digital society; a transformation that should have happened a long time ago. For example, the financial services sector has been waiting for digitalization but has resisted. That resistance was not caused by a lack of desire from financial professionals and companies to digitalise, but rather because several things needed to be changed simultaneously in the sector, including payment systems, mobile banking and transfers. I was in New York before moving to Tokyo and to be honest, some American banks are still in the early stages of digital adoption. When you look at it, COVID-19 has been a great accelerator for change. The things that financial institutions have been wanting to accomplish in the last ten years were realised in a year. The entire digitalization of the banking sector happened at an unprecedented speed, fast-tracked by COVID.
Another example of the impact of digitalization during the pandemic is found in the medical sector. It usually takes five years to develop a vaccine; however, COVID-19 vaccines only took six months to be developed. The rolling out of the vaccines is one thing, but ensuring that everybody in the world gets jabbed also requires digitalised tracking, which is happening in countries such as India, Japan and in the European Union, for example. I think the digitalization that the pandemic has brought about is a strongly positive change because it profoundly impacts society by bringing about greater equality. Sometimes, if you don’t have access to technology, you can be left out. Though there is still a lot of work that needs to be done, I can say that many of the barriers to accessing the needed technologies have come down. Three years ago, it would have been difficult to imagine, for instance, that people from certain parts of Africa would be able to do everything, from financial transactions to shopping, on their mobile phones; but that has become a reality. Digital adoption has become more equal in a way, and it has become more democratic, if you will.
The pandemic also helped us focus our energies on what needed to be done to take out inefficiencies. In the manufacturing field, some pits of inefficiencies were already fixed through the automation of manufacturing systems. However, we are now looking at the digitalization of day-to-day transactions at a scale that has not happened before. The COVID-19 situation has changed people’s perspective on the allocation of resources or the investment of money and time. As the pandemic is not yet over, it is still too soon to see its real and long-term impact. Still, when we will look back to this time five years down the road, I think it will be regarded as a watershed moment. There is a silver lining on the horizon; we just need to keep on accelerating the development of new technologies. The concept of Society 5.0 advocates for more equality in society with systems that highly integrate artificial intelligence, for example. It is a work in progress, but I think it is moving in the right direction in terms of digitalization.
What value do you think digitalization will unlock in emerging countries?
The value that digitalization is unlocking is not limited to emerging economies. Even in Europe and North America, a large divide still exists between the haves and the have-nots, but digital adoption serves to reduce that divide. For example, digital finance has made it possible for people in the countryside to do their banking easily in both developed and developing countries. In the realm of agriculture, farmers are dependent on the determinants of nature. To that end, mobile phones can provide the latest information on the weather or soil condition at their fingertips, which I reckon is a scientific plus in connection to farmers’ livelihoods.
The digitalization of the economy has also completely changed the logistics industry, and it has become a catalyst for efficiency. People can order anything from anywhere in the world while sitting in the remotest parts of the planet, and the best part is that it does not cost much. Furthermore, the development of e-commerce has enabled people to sell their products without relying on a middleman.
I have observed this in rural areas in India, my home country, which may be advanced in the use of technology relative to other emerging nations such as Bangladesh, other parts of Asia, or Africa. India’s booming economy is now shifting its focus to infrastructure development, a segment that was largely disregarded before. While it took decades of development to release smartphones, digitalization has enabled simple smartphones in rural India to have access to digital technologies in a matter of years. In a digital world, software is the intellectual capital and the key to digitalization. Digitalization has allowed countries to compete more effectively; it has pushed advancements in medicine, logistics and finance; it has also benefited common people by providing direct sales channels and access to resources that were previously unavailable at a fraction of the cost. I have seen these changes first-hand and I have understood how amazing they are.
The extent to which technology touches us and will continue to do so is far-reaching, and within that ecosystem, networks play an important role. If the networks are not there, you can have as much digitalization as you want, it simply will not work. Fujitsu is fortunate to have the needed network of pipes for 4G and 5G, as well as technologies to utilize that data, including massive computing power, data centres, and the capacity to develop artificial intelligence (AI); these technologies come together to enable digitalization. I think digitalization will lead to changes that go beyond technology: it will affect how nations compete.
In many developed countries, IT is seen as a cost of doing business, and switching to cloud-based services is deemed a means of reducing costs. Nowadays, however, companies are realising that they can compete using digital platforms such as websites and mobile phone applications and that this in and of itself can be a revenue stream rather than a cost. To what extent do you have to educate potential clients as to the benefits of cloud technologies in order to overcome these misperceptions?
The aforementioned benefits apply to everyone in both developed and developing countries. One of the interesting points of digitalization is that it is a borderless experience; it breaks down borders. Digitalization offers unlimited opportunities for companies like us and for businesses worldwide. If data is indeed the new oil, digitalization leverages data to create new business segments. Two years ago, no one would have imagined that people would be doing 90% of their meetings online.
With such rapid adoption, the questions then becomes: How do you monetise that? In my household, and in the household of many people, 90% of goods are bought from e-commerce platforms and online vendors. If you have the right technology and you enable the right applications, you create an environment that is in perpetual innovation.
In comparison to other OECD nations, Japan has been relatively slow in adopting IT technologies. In the IMD’s World Digital Competitiveness Ranking 2020, Japan was 27th. To address this situation, the Suga Government made digital transformation a key point of its agenda, creating the Digital Agency and setting aside a large share of its third supplementary budget for Digital Transformation. What opportunities does Japan’s lagging adoption of digital technologies represent for Fujitsu, especially as government support increases?
On the one hand, with its 5G network and existing computing power, Japan is probably one of the most technologically advanced places in the world. On the other hand, there are a lot of things that take time to change. I think COVID forced Japan to move onto the digital highway. An average Japanese person is fairly well-versed in technology and access to technology is widespread; even the remotest parts of Japan still offer the best technical access with 5G or 4G networks. Japan has a large population for a relatively small size and a very homogeneous culture, which makes it easy to build the technical infrastructure, especially in comparison to places such as China, India, or even the United States, which are vast and with contrasting differences. In Japan, once a decision is made, the execution is carried out quickly. For instance, the initial COVID-19 vaccine rollout was slow, but Japan has now overtaken the United States and other developed countries. With how it is being carried out, Japan is likely to be among the very top in the next several months. My vaccine experience here was very smooth, and it was highly organised.
The business strategy that Fujitsu has adopted is a great fit for Japan and for other places in the world because it follows the digital value chain. From a technological perspective, Fujitsu is focused on five key areas: Computing, Networks, Artificial Intelligence, Data Security, and Converging Technologies. In a digital economy, there is a need to process immense amounts of data and we are one of the very few companies in the world that make supercomputers, such as Fugaku.
Fugaku Super Computer. Photocredit: RIKEN
People think of supercomputers as a niche product, but I think they are going to become more and more widespread because of the need to process massive amounts of data. We are believers in high performance computers (HPCs), and we are also investing heavily in quantum computing. I foresee a future where supercomputing, HPC, and quantum computing are all bundled together to provide “computing as a service,” thereby making data processing more democratic.
Secondly, networks are needed to transport data, and we are a leader on radio units worldwide. Also, our technologies are environmentally friendly. I do not want to get too technical, but we are looking at creating end-to-end virtualised networks and processes worldwide. Once we process and transport the data, we have to make intelligence out of this data, so we use AI to analyse and apply the information. Fujitsu has developed some very unique products using AI, including genomic cancer diagnostic technology, and the International Gymnastics Federation uses our AI, to give just a couple of examples. The next area is data security, and we are working on advanced Zero-Trust systems.
Fujitsu’s Judging Support System (JSS) is an AI tool used by the International Gymnastics Federation to judge players during competitions. Photo credit: Fujitsu Limited
Another unique area that we research is human technology interface, such as palm vein recognition. Such security systems are based on motions that recognise a person’s actions and predict what that person is going to do next. In countries with a declining population and a shrinking labour force, such as Japan, automatizing human jobs will become a priority. In such environments, our technology will have broad applications in the retail sector, where Fujitsu’s technology is at work on cashless registers and unmanned stores. I think we have all the right ingredients at our disposal, and our focus is not just Japan. We are now looking at pushing our expertise worldwide. At Fujitsu, we do not want to be developing a single technology because that is not equal to value-added. We want something unique and integrated; something that drives market leadership and makes a difference. In our minds, our business goal is aimed towards sustainability, borderless experiences, and Society 5.0.
Japan is not the only advanced society with a declining population, but it is the oldest country in the world. By 2035, one out of three Japanese people are expected to be 65 or older. This is creating a labour crisis, especially in labour-intensive sectors such as manufacturing, construction, and heavy industries. What technologies is Fujitsu introducing to address this problem?
The world is by no means short of people. We have to consider whether we have the right demographics to do the right jobs in the right place. At the same time, we need to see how we can leverage the enormous labour force that is available worldwide. I would say that the major solution to the labour issue is going to come from technology; may it be in manufacturing, services, pharmaceuticals, or heavy and construction industries. Let us take an example from manufacturing. Manufacturing is going to shift to a smart, sustainable, and green model that heavily employs automation technology. By that, I mean utilising robots on the assembly line, for example. To properly function, these robots require artificial intelligence, computing power and networks. How do you make that work? Well, it all comes down to being able to take the data, to process and to transport it, and to then use it to create intelligence while maintaining a secure environment. This process has to be done very quickly and in real-time. Thanks to our integrated expertise in computing, networks, AI, and data security, and human-machine converging technologies, Fujitsu is able to articulate solutions to such situations.
Automation has existed for 30 to 40 years and is by no means a new technology. The question therefore becomes: can you automate with the speed that you need to reach your objectives? And I think that with today’s technology, we are finally at the point of being able to do so. This is why I have said that supercomputers and HPCs are crucial for the next generation. When you expand the concept of connected cars and EVs to driverless vehicles, it makes us realise that the untapped areas where technology can be used are huge. I once read that digital technology has penetrated 5% to 10% of its potential applications, meaning that the untapped areas remain countless. I strongly believe that technology will be key in resolving problems linked to labour shortages and skill gaps. Shortages of labour exist because many of the work processes we employ were invented 20 to 40 years ago, and have barely changed since. However, if those processes are designed to be digital, then we might not need as many people to do the same tasks. For example, today consumers hardly go to a physical bank or an ATM anymore because everything has become cashless. This means that it takes fewer people to get the job done; it means that there is less need for human labour. If digitalization progresses, then the shortage of labour will not be as severe as you think it might be.
In a way, age becomes irrelevant when one can live to 120 or 130 years old, a realistic possibility when you take into account the advancement of technology and medical sciences. People may not need to retire at 60 or 65 anymore. If people want to work until they are 100, they might soon be able to do so!
In your view, which industrial or social areas will be most disrupted in the upcoming years?
I honestly cannot think of a single area that will not see drastic changes. Though there are still a lot of people on the assembly line, robotics and automation have been considerably integrated into car manufacturing, for example, where cars are shipped, tagged, and monitored almost autonomously. Personalities such as Elon Musk are changing the whole concept of the industry and will continue to do so moving forward.
In the construction field, 50 people used to be needed to build a house but now, with prefabrication and device technology, five people are enough. There have also been changes in education, where online schooling has allowed people to use their time for other activities.
One important paradigm-changing technology on the horizon that is waiting to be explored is quantum computing, because there is a need for massive computing power. The computer chip has already reached its limitation; a two-nanometre chip is probably the extreme physical limitation. The challenge with quantum is how to commercialise and add speed to it in a manner where you and I, or anyone else, can sit here and use it. It is based on the principle of superposition, where qubits can exist in a state between zero to one, which offers more computing possibilities, but can only be maintained at extremely low temperatures. Therefore, achieving the stability of qubits under easy to maintain conditions remains a barrier to sustainable commercially viable quantum computers. The moment you see these breakthroughs, you will see that finding the solutions to traditional problems will accelerate.
For example, due to COVID-19, it is important to consider how to seat people in a stadium while ensuring minimal contact with others. With quantum computing, one could instantly calculate the optimum seating arrangement of any given stadium. Fujitsu has used its quantum-inspired Digital Annealer technology for this scenario in Germany, and the same technology could also help determine the maximum number of people to fly on a plane, while optimising revenue. Also, it could instantly calculate real-time information about traffic, which allows for re-routing to improve efficiency and eliminate bottlenecks in the logistics industry, for instance, another recent project Fujitsu has worked on for the Port of Hamburg using the Digital Annealer. We will see a very different paradigm, and I firmly believe that it is going to happen because it is already at our doorstep; 50 years ago, nobody would have thought that computers and the internet were going to change everything like they have. In the same way, the last ten years have seen big changes, and I think that pace is only going to accelerate.
The VME platform that Fujitsu developed for Her Majesty’s Revenue and Customs’ systems in the United Kingdom will expire in 2022, and the tax agency will be moving to your cloud services; a new infrastructure that requires a new way of handling the operating system. When such changes occur, how can you help your customers and partners retrain their workforces?
Technology has become a tool for accessibility. Although it changes how jobs are performed, it is also much easier to learn new things thanks to it. 50 years ago, you could not programme a computer if you did not know about the assembly programming language – and assembly is definitely not easy. You had to be a system engineer to understand how it all worked. However, nowadays codes can be written in almost simple English. To retrain people in technology, you will use more technology! You can learn about new technologies from the comfort of your own home. As a simple example, a person will not have to go to a specialist and pay $10,000 to build a retail site or a store. People can do it themselves by taking a course, downloading web-based server software for free, building an application… and there you go! If you want to retrain yourself to acquire the skills needed in the digital economy and have the right mindset for it, then it is easy. When you have the flexibility, interest, and understand that it offers new opportunities, it can be done. However, if you want to do the same things and refuse to change anything, then you will have a problem.
Technology has lowered the barriers to what people can do. As such, together with our clients, we are jointly retraining our customers and employees while spreading digital technology. Fujitsu’s goal is to be in a state of continuous innovation because what is new tomorrow will be old the day after tomorrow. We encourage learning at one’s own pace and it is exactly what we are doing with our workforce. Today, for example, the overwhelming majority of our staff is working from home. I do not think we intend to bring them all back to working full-time in the office; still, they have the option to work where they like, and those who will be working remotely will have the chance to train themselves to do so. The employees for the system in the UK will have the opportunity to be retrained too. Interestingly, we are at a point where learning how to use new technologies is within our reach.
Fujitsu is serving a diverse range of industries, from manufacturing to banking and the medical field. How are you able to serve such diverse industry needs? What synergies have you established between the different sectors that you serve?
Each industry has its unique features, but beyond that, I would say that the 80/20 rule applies. Our goal is to provide a platform that specialists can build on. Why? Because we cannot be the gurus in every industry. A banker will know more about banking than us, and a journalist will know more about the media industry than Fujitsu ever will. Our goal is to provide the tools, the computing platform, the network, the data intelligence, and security, so that specialists can build the IT systems they require. To that end, not everything is built by Fujitsu because we also partner with other software and hardware vendors to provide integrated solutions. Technology is at the heart of every solution we provide, but our goal is not just to provide the technology, rather, our goal is to provide the solution.
The platforms that we provide cut across industries. For example, the pharmaceutical industry has notable differences from the manufacturing industry. Even in manufacturing, a car maker differs from an aircraft maker or a heavy industry maker such as Caterpillar. Nevertheless, these all require the same basic needs: transporting data, computing data, artificial intelligence, data security, and a centralised platform. That is where Fujitsu creates value. Aside from the technology, we have teams around the world that provide consulting and system integration services.
Integrating IT into existing business practices has not been easy for banks, manufacturing companies, and other institutions because IT with machines, data centres, or yearly software support can be costly. However, our platform together with our integrated services provide our customers with what they need. I believe in the world of innovation, and Fujitsu cuts across this because we are interesting, very relevant, and focused on becoming increasingly global. We have traditionally done a lot of work outside of Japan, but we are currently deepening our efforts to leverage the best resources regardless of where they are in the world. For example, we are currently investing in building a research centre in India, as well as a new centre of excellence in Israel.
Fujitsu’s team at the Cybersecurity Centre of Excellence in Israel. Photo credit: Fujitsu Limited
We are addressing the worldwide market. We have a significant presence in Europe, and we are expanding in America. If you are successful in Japan, that does not necessarily mean you will be successful elsewhere. Japan is advanced but also very homogenous in some ways. Conversely, the market size of America and Europe is enormous, and we see that both as a challenge and as an opportunity. That being said, I am convinced that we have the right technology and the right business model to address any of those markets.
In Japan, 70% of companies outsource their IT infrastructure and systems. With digital transformation (DX) in full swing, international companies such as IBM and Accenture are now increasingly investing in the Japanese market. Why should companies embracing DX choose Fujitsu over companies such as IBM or Accenture? What makes you the trusted DX partner?
Today, many major Japanese banks use mainframes. Now, are the mainframes essential for business? Maybe not. The advice that I would give is naiseika: a Japanese expression that means something along the lines of “manage your own business.”
In the past, there was an issue about how IT skills and literacy could keep up with technological advances. However, if a business is based on a service model, it does not require so many IT investments. As such, I believe that the outsourcing model has run its course; it is finished as we traditionally know it. I think Fujitsu has made a very bold move with digitalization. We are investing in technologies and telling Japanese companies not to blindly outsource because it does not make any sense. We tell our customers to own their destiny and look at what is best for them. The technology is there, and the service economy model allows you to pick what is best for you. Many systems now provide HR, sales, or manufacturing as a service, and there is no need to build a specific system for each. We can bring them all together with our core ingredients. With the speed at which business is changing, you cannot let IT become a roadblock. On the contrary, IT must be an enabler; it must accelerate the changes and speed of your business.
For example, who would have forecasted the pandemic? I do not think COVID is a one-off, as political changes or natural disasters could also significantly impact how we do business. Companies must be flexible and nimble. Though you cannot predict everything, if you have huge sum costs and gap excess, bankruptcy is bound to happen – and Fujitsu is there to help customers cope with this uncertainty.
As I said, we are not trying to build every technology. Consequently, Fujitsu is actively seeking for partnerships. As a world leader in five key technology areas, namely, Computing, Networks, AI, Data Security, and Converging Human-Machine Interfaces, our aim is to partner with complementary companies. Our partnerships serve that purpose.
Moving forward, what type of partnerships will you be looking for, and in what industries or applications?
We do not partner up just for the sake of partnership, and I do not think anybody should. If you think of customers as the centre of everything, then we will partner with anyone who can provide solutions to our customers while fitting to our corporate values. We want to concentrate on R&D in areas where we can drive innovation and become a market leader, then we can share that technology with other vendors as well. For example, an important element in security is trust, but there are other elements, such as different types of network security, so we will partner with different security vendors. We do not need to build an ERP system nor a service management system. We will find partners for these.
On the other hand, we want to further build our own computing power and technologies for areas in which we already have market leadership, like quantum and high-performance computing. We want to have an established leadership in networks, but as it is such a wide area that includes everything from virtualised networks to AI, we will not be able to create everything in-house. We will build some of these features in-house while partnering with other companies to offer other features. At the end of the day, the customer does not really care whether something is made by Fujitsu, X, or Y, they just want a solution to their business needs, and that is our goal. We will partner with the appropriate technology and non-technology vendors to deliver the right solutions to our customers.
As the recently appointed CTO of Fujitsu, what objectives would you like to achieve in this position?
Fujitsu is at an interesting juncture in its history because it is trying to support the massive changes that are occurring in society. To that end, technology is key. As such, my goal is to bring the different parts of Fujitsu’s technology and align them with our customers’ goal to drive digitalization on a global scale. We are number one in Japan in several areas, but I think Fujitsu has a lot more opportunities globally. Working with the rest of the management team, I believe that Fujitsu will take the lead in ensuring that the change that is happening will continue and accelerate. Technology is at the heart of that transformation.
It is a very exciting role for me, and I owe my position to the vision of the CEO and of the board. They gave me this opportunity so that I could influence the company’s new vision and have an impact on the change Fujitsu aims to bring about. As such, I am hoping to contribute to Fujitsu’s business in a significant way. I have worked in many companies, but I am very impressed by Fujitsu’s desire to have an impact and to improve society through technology.