Digital Transformation (DX) is a term that continues to gain traction in the business world. While more companies are setting goals to promote DX so they can enhance their competitiveness, many companies are still finding it difficult to implement it.
To get a better understanding of the challenges enterprises in Japan are facing with DX, SoftBank News spoke with Daisuke Fujihira, President of data business solution provider INCUDATA Corp., a SoftBank Corp. (TOKYO: 9434) group company that includes Japan-based marketing major Hakuhodo Inc. and US-based customer data platform (CDP) solutions provider Treasure Data, Inc..
Vice President, Head of Digital Marketing Division
Enterprise Business Unit, SoftBank Corp.
President, INCUDATA Corp.
After working for Sony, Fujihira joined SoftBank BB (now SoftBank Corp.) in 2004. He served as Head of the IT Systems Division at the Fukuoka SoftBank HAWKS and Head of the Digital Marketing Business Division at SoftBank Telecom (now SoftBank Corp.). Since 2019, Fujihira has been President of INCUDATA, and he has concurrently led SoftBank Corp.’s Digital Marketing Division at its Enterprise Business Unit since 2021.
Why companies in Japan are behind in DX
What’s the current state of DX in Japan?
As digital technologies evolve, consumer behavior and markets are changing dramatically. Sadly, we no longer live in a time where companies can sell their wares by simply making a good product. To adapt to the new landscape, companies need to promote business transformation using data and digital technologies, or, in other words, DX. However, DX is not going so well for a lot of Japanese companies. The Global Digital Competitiveness Ranking published annually by the International Institute for Management Development (IMD) shows that Japan's international ranking has declined year-by-year. From a global perspective, Japan is a DX laggard.
INCUDATA was formed to address this problem by supporting enterprise DX through the utilization of data. We were established in 2019 to accelerate DX promotion while leveraging the expertise of our three stakeholders: SoftBank, which supports telecommunications infrastructure, Treasure Data, which is involved in CDP (customer data platform) solutions to support the utilization of customer data, and Hakuhodo, which excels in marketing and consulting.
What are the obstacles to DX adoption in Japan?
I believe there are three main reasons behind why it’s taking time for DX to gain traction in Japan. First, there’s a lack of vision and strategy at many companies. DX is a means to achieve management and business goals, so it’s necessary to consider what the data should be used for. A roadmap must then be formulated, and concrete measures put into place. To promote these measures, knowledge of both data utilization and strategic planning is a must.
Second, there’s a lack of human resources with "data-driven" knowledge to make decisions based on data; DX is not just about introducing tools and digitizing workflows. Data utilization is key, so people who can appropriately implement data management to strategically accumulate, integrate, and utilize data are a necessity.
The third issue is the case where there is no mechanism to acquire data in the first place, or even if there is, the data is scattered across various departments and cannot be utilized effectively across the board. A lack of investment in digital tools and siloed data are also factors that hinder DX promotion.
Professional knowledge and expertise are key to DX promotion
What actions are needed to resolve these issues?
Not many companies have the right resources, environment, and strategy to face these issues on their own. Professional knowledge and expertise are essential to promoting full-fledged data utilization.
At INCUDATA we support companies so they can resolve their DX issues. We have a diverse team that includes members from our three stakeholders and major strategic consulting firms. Furthermore, by bringing together professionals from various fields, we can provide one-stop support to our clients, from the planning of data utilization strategies to the construction of data infrastructure and support for its implementation, not to mention the planning and implementation of marketing initiatives. This is our major strength.
What specific issues do you address by providing one-stop support?
The main objectives for companies promoting DX are to increase sales and reduce costs by streamlining business processes. Even though DX is a catch-all term, different objectives and situations require different paths to realize it. Also, when Japanese companies promote DX, in some cases, they use different partner firms for each phase, such as strategic planning, data infrastructure construction, and marketing. As a result, it’s not uncommon for the scope and responsibilities of each company to be divided, with consulting firms only involved in strategic planning and system vendors only concerned with building the data infrastructure. This makes it difficult to promote DX in a truly integrated and meaningful way.
INCUDATA does not simply provide consulting services or tools for implementation. Rather, we work hand-in-hand with customers with a view to transforming their business by supporting their DX promotion. Ultimately, our role is to provide support, including the transfer of skills and knowledge, so that companies can utilize data on their own.
Can you give us an example?
We’ve assisted a wide variety of companies in all industries and business sectors, including major Japanese financial institutions, real estate firms, and food and beverage companies.
One example is the case of Kentucky Fried Chicken Japan Ltd. (KFC Japan). KFC Japan had been unable to make full use of their accumulated data, such as data-based targeted coupons, because data acquired through various digital channels was fragmented.
We then utilized a CDP platform to integrate data acquired from each channel, such as customer information, purchase history, and apps, and supported the linkage of the data with the campaign tools. We believe we helped them implement data-driven advanced marketing initiatives, develop products, and realize optimal communication methods tailored to customer interests.
Leading the digital shift in Japan
What are your thoughts on promoting DX in Japan?
Japan’s digitalization accelerated due to the pandemic. That said, we can’t say that the state of DX at Japanese companies has significantly improved. As I mentioned earlier, Japan's digital competitiveness continues to decline. We want to put a stop to this situation through our business. Supporting the business transformation of companies will have a positive effect on society and should in turn improve Japan’s overall digital competitiveness.
What kind of future business development do you have in mind based on your results so far?
We’d like to share the know-how and knowledge we’ve accumulated through our support of various companies to even more companies. We’d also like to take on new business areas by utilizing the assets and relationships not only of SoftBank, Treasure Data, and Hakuhodo, but also those of group companies such as Yahoo! JAPAN and LINE.
This fiscal year we’re focusing on developing measures using what’s called a data clean room (a system that enables the flexible analysis of data with the permission of the user whose data is held by a business in a privacy-protected, anonymized environment) in partnership with Z Holdings. We’re confident that, once deployed, we’ll be able to support the advancement of digital marketing for an even greater number of companies.
Although INCUDATA has a solid foundation, we’re now in our fourth year of business and need more human resources to further expand our business. We want to help companies transform their business through the utilization of data, and we want to support Japan’s digital shift. So we’re always looking for people with passion who share INCUDATA’s vision.
(Posted on December 12, 2022, Original article posted on November 14, 2022)
by SoftBank News Editors