I would like to share a few thoughts with you at the start of the second half of FY 2022.
With the COVID-19 pandemic continuing to spread, I would like to express my appreciation to our executives and employees who are carrying out our business activities while working to prevent the spread of infection.
In the second half of FY 2022, I would like to see the Go-to-Market teams established in the Sales Management Group and each Business Group in April take the lead as the sales departments and business departments work together even more closely, collaborating across groups to expand our business through N-fold magnification (applying successful cases to other jobs).
Throughout the first half of the year, employees responded to challenges including continuing measures to prevent the spread of COVID-19 as well as restoration efforts for natural disasters such as the heavy rain that fell in areas such as the Tohoku and Hokuriku regions in Japan and Tropical Storm Meari during August. Also, in the "Nikkei Computer Customer Satisfaction Survey 2022-2023" published by Nikkei Business Publications, Inc. in August, our company won first place in both the "IT Consulting / Upstream Design Services (Manufacturing-related)" and "System Operation Services (Manufacturing-related)" categories. I would like to once again thank everyone involved for their efforts.
In the 2024 Mid-term Management Plan, the digital systems and services sector (DSS sector) at Hitachi Ltd. aims to move to "a new growth stage of the Lumada business" by achieving significant growth of the Lumada business in the global DX (digital transformation) market. Specifically, we will combine our digital engineering through co-creation with GlobalLogic and other means with our other services (managed services) such as Hitachi's highly-reliable system development (system integration), digitalized products in other sectors (connected products), secure data management, and hybrid cloud compatibility, and by doing so, support the problem-solving cycles of our customers in all domains.
Furthermore, in April, Hitachi Ltd. established Hitachi Digital LLC based in North America, where the digital domain is growing rapidly. Their goal is to take the lead in establishing and executing a digital strategy across the Hitachi Group, maximize synergy with other sectors within Hitachi, and accelerate the expansion of the Lumada business for the entire Hitachi Group.
Through these initiatives, we will expand the Lumada business both within Japan and overseas at a growth rate exceeding that of the market, aiming for 2.6 trillion yen in revenue and 0.5 trillion yen in EBITDA (earnings before interest, taxes, depreciation, and amortization) for the entire DSS sector in FY 2024.
I would like to make a few requests regarding the following five points.
1) Promoting health and productivity management
In Japan, the "Health Up & Guard Plan (HUG)" began in May as an initiative for helping everyone maintain and improve their health. In the second half of this fiscal year, we plan to collaborate with an external medical agency opening a medical clinic near the Hitachi Systems Head Office in order to start "Smart One Clinic", a next-generation medical clinic that allows for visits to be both online and in-person. Currently, online care has started ahead of in-person care. Furthermore, we are also considering initiatives such as providing a "Conditioning Management System (CMS)" that supports behavioral changes in daily life.
With regard to COVID-19, the seventh wave of infections in Japan is passing its peak. However, countermeasures remain necessary.
Moving forward, please continue to work to prevent infection in your daily life, refrain from attending dinners, and the like.
2) Expanding business in focus domains
The Hitachi Systems Group has also set "growth" as the keyword for its 2024 Mid-term Management Plan, and we are aiming to expand our business with a focus on "digitalization", "managed services", and "modernization". Belonging to the IT service group of the DSS sector, we put particular focus on the sector of "Lumada services" for the Lumada business. This sector provides continuous value to customers. We will bear the core of digital business for all of Hitachi as we focus on N-fold magnification for business by creating software packages of our domain knowledge in fields such as local government DX, manufacturing DX (smart factories), and medicine and health care, and then by promoting their accumulation and use as Lumada use cases.
3) Expanding our global business
As part of the further expansion of our global business, we reorganized Cumulus Systems Inc. (CSI) and Hitachi Systems Security Inc. (HISYS-SEC), our group companies in North America, effective October 1. Specifically, the CSI company name was changed to Hitachi Systems Trusted Cyber Management (HSTCM), HISYS-SEC was made a subsidiary thereof, and HSTCM absorbed HISYS-SEC (USA). These changes will allow HSTCM to fuse the software development skills and platform management technology of CSI with the cyber security monitoring technology and operation experience of HISYS-SEC to strengthen its highly-reliable security service infrastructure and operation services under the digital strategy of Hitachi, living up to its name of "Trusted". Furthermore, HSTCM will also collaborate Hitachi Systems India Pvt. Ltd. (HSI) to begin expanding advanced security services in the Indian market as well. Through these efforts and more, we will aim to build our status as the top security vendor in the world. The Hitachi Systems Group will accelerate the expansion of our service businesses both inside Japan and overseas through cloud-based ICT infrastructure solutions, managed services, security services, and more.
4) Expanding and strengthening our human resources
In order to effectively promote our business, we plan to improve our human resources of approximately 4,600 people across the entire Hitachi Systems Group by the end of FY 2024. To this end, in Japan, we updated our website for mid-career hiring in July, and we are currently preparing an "onboarding package" program aimed at helping new hires understand our company and quickly become effective team members.
We will also enter the phase for utilizing "job-based human resources management" during the second half of this fiscal year, and I would like to further consider and deepen autonomous career development as well as our autonomous working styles leveraging various work structures such as the discretionary labor system.
5) Strictly following Basics and Ethics
When making decisions and judgments in various situations in the second half of FY 2022 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)". "S" includes not only safety, but health as well. Please place utmost priority on "health and safety take precedence over everything else" in your actions.
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".
The double-page spread at the start of our Company Profile has the following words:
"Create a place for everyone in an ever-changing world".
"Everyone" here includes not only our customers and partners, but also our employees. I hope you will engage in your work with a positive attitude, never forgetting that you have a place to be and a place to work here.
October 3, 2022
Setsuo Shibahara
President and CEO
Hitachi Systems, Ltd.
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