Last fiscal year, we faced a harsh macro-economic environment, due to factors such as the spread of the COVID-19 pandemic, increasing geopolitical risk such as the situation in Ukraine and trends in US-China relations, and accelerating global inflation including escalating energy prices.
I would like to express my sincere appreciation for the efforts of all the executives and employees who strived to continue carrying out business activities even while making efforts to prevent infection.
In order to achieve our target values for FY 2023 in this situation, I believe we must hold meaningful discussions with our customers and provide satisfying services with high added value, and then, having done so, reflect the increases in various costs in our sales prices. I believe that our ability to do so will significantly impact our growth in FY 2023. I ask that each and every one of you engage in your daily work with a new mindset aimed at achieving growth.
As of April 1, 2023, Hitachi, Ltd. improved their business structure in order to further accelerate the growth of the social innovation business centered on the areas of digital technology, green business, and innovation.
In order to accelerate the digital transformation (DX) for both customers and the Hitachi Group, the new digital business structure consolidated the consulting, design, and digital engineering functions both inside Japan and overseas within the Digital Systems and Services Sector (DSS Sector). A Digital Engineering Business Unit (DEBU) was also newly established. By working with the Hitachi Group's various business divisions to accelerate the value co-creation cycle in Lumada, we will solve issues faced by society and customers, create new value, and further expand the social innovation business.
Our two measures for FY 2023 are as follows.
① "Improving and Promoting GTM Measures" and "Reliably Implementing Growth Strategies"
For "Improving and Promoting GTM Measures", by collaborating with Lumada and the like, we will focus on providing standardized products and services that can solve issues shared by many customers, with an awareness of horizontal deployment across business departments using improved GTM strategies and of N-fold magnification (applying successful cases to other jobs) through software assets.
For "Reliably Implementing Growth Strategies", we will engage in the following five points.
These are "Expanding our digitalization", "Expanding our managed services", "Ensuring profitability in our base businesses through modernization", "Accelerating the service shift in our global business", and "Making efforts for green business". For "Making efforts for green business" in particular, we newly established the "Green Transformation Promotion Management Group" in April 2023 in order to further accelerate the promotion of sustainability for the Hitachi Systems Group as a whole in light of Hitachi, Ltd.'s green strategy. Doing this will allow us not only to accelerate the establishment of our green transformation (GX) business, but also to engage in efforts such as providing decarbonization solutions to small and medium-sized customers utilizing results from our internal efforts, developing more sophisticated services, and expanding the scope of services we provide by collaborating with the Hitachi Group, thus promoting carbon neutrality to achieve a decarbonized society.
Furthermore, in order to improve the IT service business focused on the DX and cloud fields, Hitachi, Ltd. reorganized the Hitachi Group companies in Japan in the Digital Systems and Services Sector (DSS Sector). As of April 1, 2023, the data center solution business of Hitachi Information Engineering was transferred to the Hitachi Systems Group, and new members joined our group. I would like to give them a very warm welcome.
② "Increasing Profitability and Expanding Cash Creation" and "Maintaining a Healthy, Safe, and Secure Work Environment"
For "Increasing Profitability and Expanding Cash Creation", we will engage in "improving quality management" and "improving project management" aimed at reducing the occurrence of loss cost.
Also, for "Health Up & Guard Plan (HUG)", an initiative for helping everyone maintain and improve their health, we plan to introduce a "Conditioning Management System (CMS)" at Hitachi Systems group companies in Japan in FY 2023. This health application will support employees making changes to their daily behavior. I ask that you all use it proactively.
① Autonomous Working Styles
The Hitachi Systems Group cannot achieve growth without the growth of each and every one of you.
With that in mind, in Japan in FY 2023, we will begin "efforts to improve HISYS appeal". These company-wide measures will heighten our brand value, both inside and outside the company, and increase the appeal of Hitachi Systems. We have already started questionnaires and discussions by workplace representative members aimed at increasing our appeal. We will analyze the opinions we receive from all of you through these questionnaires to include the results in future activities, as well as draft measures to increase our company appeal through further opinion collections and provide feedback to workplaces.
Also, as part of our expansion and improvement of our human resources for growth, we will not only improve our acquisition of human resources through mid-career hiring and the like, aim for new employees to quickly become effective team members through post-hiring onboarding education, and promote "job-based human resources management", but we will also revise our discretionary labor system in April 2023 to deepen our autonomous working styles. We will expand eligible employees as well as aim for working styles using discretionary labor and flexible working hours.
Moving forward, we will put even more effort into cultivating human resources including skill education and acquiring human resources, and we will support the career development of our employees and improve our operations structure. With regard to career development in particular, we newly established a career support center in October of last year and we are promoting efforts to support employees undertaking challenges, such as by establishing an in-house open recruitment system (side-job style) and an in-house free agent system.
In this way, the company will develop various measures and efforts to support the autonomous working styles of employees. I ask that you all utilize this to achieve personal growth as well as growth for your teams and organizations, and that you work to create new value as the Hitachi Systems Group. However, in order to change our behavior, we must first change the mental side, that is, our awareness and perspective. Please begin by considering your own health and working style and develop that into behavior for taking on challenges and growing.
② Basics and Ethics
In addition to working in styles that are aware of growth in this way, I also ask that you thoroughly enact "Basics and Ethics" and the priority order of "S (Safety) >> Q (Quality) > D (Delivery time) > C (Cost)", so that each and every employee and the company as a whole may achieve wholesome growth.
In March 2023, Hitachi, Ltd. revised the "Hitachi Group Codes of Conduct" to form the "Hitachi Group Code of Ethics and Business Conduct". This revision was made because, in order to expand our business globally, it has become even more important to more clearly show our commitment as the Hitachi Group to fair and honest management. The Hitachi Systems Group is also making revisions to keep in step. I ask that you practice fair and honest business activities in accordance with the "Hitachi Group Code of Ethics and Business Conduct".
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 4, 2023
Setsuo Shibahara
President and CEO
Hitachi Systems, Ltd.
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