Kathy Gibson is at Fujitsu Forum 2018 in Munich – Fujitsu has announced a new global structure to help the organisation address the opportunities around digital transformation.

“We have put in place measures for strengthening the business,” says Tatsuya Tanaka, president of Fujitsu.

The plan to increase profitability with connected services, along with growing Fujitsu as a service-orientated company has failed as regards operating margins and volume of sales outside of Japan, Tanaka explains.

“The market is changing drastically, and this presents a number of opportunities,” he says.

Among the operational changes is the globalisation of product development, which has made a start with the AI centre of excellence being located in Vancouver, Canada.

“Fujitsu will also break away from the ‘not invented here’ syndrome,” Tanaka says. “Previously, our priority was on developing all of our own products. We will still do that to some extent, but believe it is more important to combine the products we develop with strong products from partners around the world.

“This will allow us to add value.”

A third priority informing the new direction is to offer services that can be quickly developed to meet the demands of markets.

“We will strategically locate service and research and development (R&D) centres in different regions,” Tanaka explains. “The goal here is to quickly provide services that suite the various needs of markets around the world.”

Developing global talent is the fourth imperative, he says.

“Recognising the value of human capital is key, and we will step up our efforts to develop employees who can get things done.”

While existing employees will be redeployed into the service integration business, Fujitsu will also partner with external service companies to achieve its services goals.

“Enterprise Agile will be implemented across all service operations, and training will be rolled out worldwide, starting with 10 000 staff members in the EMEIA region,” Tanaka says.

“We are also advancing the use of digital technologies to automate and raise the sophistication of operations.”

These operational changes are expected to result in a difference of about 10-million yen in the next financial year.

The changes will be rolled out in Japan and internationally, with an increased focus on global delivery centres, centres of excellence and global partnerships.

“We will increase our product competitiveness, particularly in the cloud,” Tanaka says.

Fujitsu has forged partnership with both Microsoft and VMware, training thousands of its staff members and partners as certified engineers.

“We are focusing in the hybrid IT field, while also working on expanding our range of applications that run on the cloud including AI and IoT.

“We will also strengthen out governance structure to ensure globally uniform service delivery.

“This enables us to focus our management resources in the areas we excel in, while growing our global business.”

Part of the global re-organisation will see focus shift away from the product business and result in the closure of the Augsburg manufacturing plant in Germany

Fujitsu will also reduce its management resources in countries where there isn’t a strong customer base, resulting in a review of approximately half of its global offices.

The company will also reduce indirect costs to achieve better cost competitiveness.

The new framework put in place to promote the initiatives, Global Matrix 5.0, is expected to help deliver value to customers around the world.

Practically, Fujitsu will immediately step up executives changes, with two executive directors resigning immediately.

Tanaka says this will help to create more agility in the top management structures.

In the short-term, business groups will be consolidated to focus on technology solutions, with some Fujitsu executive officers concurrently serving as subsidiary presidents to strengthen governance.

About 5 000 staff members in Japan will be redeployed, while the company’s manufacturing structure will be reviewed and its formation changed in line with the business.

The net result of the re-organisation targets an operating profit margin of 10% for technology solutions by 2022.

“In the new era of digital transformation, I want Fujitsu to continue to be a trusted business partner, contributing to the creation of a prosperous society,” Tanaka says.