Over the past three years, the Hitachi Systems Group has established a business structure that can assuredly exceed our target for the 2021 Mid-term Management Plan, namely, 500 billion yen in annual sales. We have also ensured an operating profit margin in the double digits. I believe a significant reason for this was our ability, as a corporation supporting the social innovation business promoted by the Hitachi Group, to collaborate with Hitachi's Lumada and help achieve digital transformation (DX) for our customers through a digitalization service based in on-site operations.
I would like to express my sincere appreciation for the efforts of all the executives and employees who, despite various restrictions throughout the COVID-19 pandemic, have carried out business activities while making efforts to prevent infection.
Today marks the start to our new 2024 Mid-term Management Plan.
The definition of the Lumada business has also been newly revised for FY 2022 across the Hitachi Group. In the Hitachi Systems Group, we will consider the two conventional businesses of digitalization and managed services to be part of the newly-defined Lumada business. In the 2024 Mid-term Management Plan, we will maintain profitability and aim for sustainable growth centered on the Lumada business. Specifically, we will engage in the following four points.
We will engage not only in industrial DX centered on the manufacturing industry through the expansion of DX Smart factory and the medical health care platform, but also in utilizing showcases (user case studies), N-fold magnification (applying successful cases to other jobs) through expanded partnering, and creating value and expanding sales through the Lumada ecosystem.
Moving forward, the roles of operation, maintenance, and monitoring, which decide the quality of services including security, will become even more important. We will utilize our strength, that is, our service infrastructure to provide services with high added value to customers, and in doing so, expand our business.
We will not only promote cloud lifts and shifts in each business of the Hitachi Systems Group, but will also utilize the "government cloud", which the Japanese government is aiming to ready for joint use across municipalities by the end of FY 2025, as well as engage in support for the standardization of "ADWORLD", Hitachi's solution for municipalities. It is expected that, as modernization advances, the needs for stable system operation will increase and become more sophisticated.
Centered on "Hitachi Systems India", which changed its corporate name in January of this year, we will accelerate the expansion of our service businesses in the same way as in Japan, namely, through cloud-based ICT infrastructure solutions, managed services, security services, and the like.
Through the measures described above, we will leverage the base that we have strengthened thus far as we shift to a stage where we aim for growth.
In order to effectively promote our business, we plan to improve our human resources across the entire Hitachi Systems Group, including not only hiring recent graduates and experienced individuals, but also constructing more cooperative relationships with partners, M&A, and more.
The Hitachi Systems Group cannot achieve growth without the growth of each and every individual employee. From this perspective, we will aim to shift to "job-based human resources management" within Japan. Starting with group companies in Japan, we will clarify the duties of all positions in our company and the skills and experience necessary for each one, and then aim to appoint human resources for said positions based on the individual's ambition and capability, regardless of age or affiliation.
We will put even more effort into cultivating human resources including re-skilling education and will support the career development of our employees.
The growth and behavior of each one of you will lead to the creation of new value. Let us work together to build a Hitachi Systems Group that will lead society.
In order to contribute to the achievement of a sustainable society through our business and corporate activities, we will also improve our efforts for ESG (Environmental, Social, and corporate Governance). Together with the Hitachi Group, we are aiming for carbon neutrality by FY 2030 to achieve a decarbonized society. We will promote measures including carbon neutrality at our business sites, reducing CO2 emissions throughout the entire value chain, and switching to electric vehicles for company cars.
Furthermore, we will expand sales of our "paperless solutions", investigate commercialization of services for maintaining and preserving forestry, and take other measures to improve our efforts for green transformation (GX).
We will also engage in creating business from the perspective of social issues. Specifically, this refers to digitalization and regional revitalization in collaboration with municipalities, social infrastructure companies, financial institutions, and the like.
Through efforts like these, we will contribute to the improvement of the three values of environmental value, social value, and economic value, and will support the improvement of people's quality of life as well as our customers' value.
Starting today, Hitachi, Ltd. will improve their business structure in order to achieve further progress and growth for the social innovation business centered on the areas of digital technology, the environment, and innovation as stated in the 2024 Mid-term Management Plan. Previously, there were five sectors of "mobility", "smart life", "industry", "energy", and "IT". This structure has been simplified into the three sectors of the "digital systems and services sector (DSS sector)", "green energy and mobility sector (GEM sector)", and "connected industries sector (CI sector)". While we will maintain the conventional business unit (BU) structure, we will improve collaboration between departments with similar business characteristics and accelerate growth through "digital technology", "the environment", and "innovation", and by doing so, we will aim for a global top position.
Our company, together with Hitachi Solutions, Ltd., belongs to the "DSS sector", and we will collaborate with companies and business units across the Hitachi Group as the core of the digital business for all of Hitachi.
I believe that in order to assuredly achieve our budget goals for the first fiscal year of the 2024 Mid-term Management Plan, the Hitachi Systems Group must take action closer to the market. With that in mind, as of today, Hitachi Systems has established the new office of "Operation Officer". We have appointed members of the Group Executive class from our sales departments. Moving forward, I would like the Operation Officers to lead the sales departments to work even closer with the business departments to handle jobs and expand our business.
I would once again like to ask all our employees to "ensure health and safety".
Measures for COVID-19 remain necessary throughout society. Moving forward, please continue to work to prevent infection in your daily life, refrain from attending dinners, and the like.
When making decisions and judgments in various situations this fiscal year as well, I would like each and every employee to continue to use this order of priority: "S (Safety) >> Q (Quality) > D (Delivery time) > C (Cost)".
I ask that each and every employee respect all your coworkers, striving to behave in a sincere and responsible way in line with the "Hitachi Systems Codes of Conduct" and the "Hitachi Systems Human Rights Policy".
Currently, many people in Ukraine including fellow members of the Hitachi Group are facing an extraordinarily difficult situation. I sincerely wish that this grave situation is resolved as quickly as possible. I also pray that our employees and their families who have been infected with COVID-19 and are resting at home will recover as quickly as possible.
I would like to conclude my message by offering my best wishes for another fiscal year of healthy, bright, and fulfilling days for our customers, partners, Hitachi Systems Group employees and their families, and all other stakeholders.
April 1, 2022
Setsuo Shibahara
President and CEO
Hitachi Systems, Ltd.
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