Fujitsu : Creating Value for Customerswith "For Growth" and "For Stability"

HOME	Creating Value for Customers with "For Growth" and "For Stability"	Fujitsu Group	Integrated Report	19

Creating Value for Customers with "For Growth" and "For Stability"

The Fujitsu Group is determined to deliver value to customers in the two business domains of "For Growth," which contributes to the transformation and growth of our customers, and "For Stability," which contributes to the stable operation of our customers' IT infrastructure and business operations.

To accelerate value creation in these two domains as the best partner for customers embracing digital transformation (DX), the Group is working to restructure its global business strategy, strengthen its ability to solve the problems of our Japa- nese customers, and create a framework that will contribute to further stabilizing our customers' businesses.

HOME Creating Value for Customers with "For Growth" and "For Stability" Message from the COO

Message from the COO

We will create a new growth scenario for our global business and pursue medium- to long-term growth as a technology company by renewing our IT service delivery model in Japan.

Hidenori Furuta

Representative Director

COO, CDPO

Head of International Regions

Fujitsu Group

Integrated Report

20

Restructuring Our Business to Contribute to the Successful Digital Transformation of Japanese Companies

The Fujitsu Group's business structure in Japan has undergone a major transformation with the full-scale launch of Fujitsu Japan and Japan Global Gateway (JGG) in April 2021 and the reorganization of its systems integration subsidiaries. This shift is the Group's answer to the so-called "2025 Digital Cliff," an expression used by Japan's Ministry of Economy, Trade and Industry that highlights the risk of a delay in DX due to serious problems including shortages of IT talent and the obsolescence of core systems that many Japanese companies are facing.

As partners realizing DX with our customers, we technology companies have two missions. The first one is to make valuable proposals that contribute to solving the problems our customer companies and society are facing. The second one is to build a new service delivery model to replace the multiple contractor structure* in the software and service industry that is distinctive to the Japanese market.

Fujitsu Japan addresses the first one of these missions. "business producers" who have mastered design thinking and other essential methodologies for DX implementation propose ways to overcome the challenges using digital

Fujitsu Japan	P24-25
Japan Global Gateway (JGG)	P26-27

• A structure in which an IT service vendor that receives an order for IT system development from a user company subcontracts parts of the development work to a development partner, which in turn subcontracts a further part of the work to another company. While this is effective in securing manpower to carry out large-scale development projects in a short period of time, it also involves problems such as dispersion of development know-how and reduced efficiency.

HOME

Creating Value for Customers with "For Growth" and "For Stability"

Message from the COO

Fujitsu Group

Integrated Report

21

technology. In order to visualize results, we have established a set of KPIs to measure the actual quality of proposals aiming to realize DX and do not merely focus on the amount of orders we receive, as we did under the traditional KPI model used by our sales department. We are monitoring the progress on the KPIs using the data from the customer relationship management (CRM) system that we have introduced for managing business deals with customers. In addition, we have established six area headquarters across Japan, and are developing offerings tailored to regional characteristics by leveraging the knowledge of the reorganized and integrated subsidiaries.

JGG is addressing the second mission, the building of a new service delivery model to replace the multiple contractor structure. JGG is the core of this new service delivery model to standardize services and expand shared services. Under this model, JGG will promote the standardization of systems and software development operations, and will also be involved in the design, development, and testing of shared services in collaboration with the Global Delivery Centers (GDCs), the Group's overseas development locations. Collaboration between JGG and the GDCs will enable a speedier and more stable delivery of high-quality services than ever before and will also contribute to strengthening the medium- to long-term profitability of the Group's overall services business through improved productivity. By making greater use of our GDCs, we expect to be able to more effectively use the resources of our development partners in Japan, who have cultivated the know-how, experience, and expertise essential for providing services to specific industries and customers, and to increase the added value of our services.

Efforts to Prevent Recurrence of System Failures

Led by Our Purpose, we pursue the stable provision of high- quality services and the achievement of trusting relationships

with customers through our services. This pursuit is also the foundation and driving force in our "For Stability" business domain, which contributes to the stable operation of our customers' IT infrastructure. The system failure of the Tokyo Stock Exchange's trading system in October 2020 was a regrettable incident that shook this foundation, and we would like to apologize again for any inconvenience caused to the concerned parties.

The OEM products that caused the system failure were quickly inspected after the cause was identified, and the review of the incident has already been completed. We are also reviewing the systems delivered to our other customers by verifying whether there are any risks or issues that have not been covered by previous inspections. In addition, we have established a quality assurance organization directly reporting to the CEO and are making Groupwide efforts to strengthen our framework for improving the quality of our products and services.

Preventing recurrence of system failures

P80

Region-specific Growth Scenarios

We are also making progress in restructuring our global business to achieve the financial targets for the fiscal year ending March 31, 2023, set out in our Management Direction. By the fiscal year ended March 31, 2021, we completed structural reforms to avoid losses in our global business. Currently, we are developing region-specific growth scenarios, incorporating the seven Key Focus Areas we set out in 2021.

In each region, we have almost completed the establishment of an organizational stance for deploying the four key elements of our global business strategy-a globally uniform portfolio, global account plans, global delivery, and global

alliances. Our global of ferings , for example, already include nine solutions. Together with the head of each region, the business units responsible for the development of these solutions set sales targets and investment plans, and review progress every month. Global accounts currently include 132 strategic global customers. Here, we are promoting the standardization of service plans we offer to our customers and are consolidating pipeline information for future orders.

Key Focus Areas	P22-23
Global offerings	P28

Achieving Management Goals

and Setting a Course for the Future

The initiatives described so far will contribute to the domains "For Stability," aimed at the stable operation of our customers' IT infrastructure, and "For Growth," aimed at the transformation and growth of our customers' businesses, as set forth in our Management Direction. These initiatives are also a stepping stone toward the Group's growth in 2030 and beyond.

In 2021, we realized a new structure for R&D with the aim to leverage the development capabilities of cutting-edgetechnologies-as exemplified by Fugaku, the world's fastest supercomputer-in the seven Key Focus Areas and global offerings that will drive "For Growth" and lead to medium- to long-term growth of the Fujitsu Group.

We will steadily proceed with medium- to long-term efforts aimed at achieving Our Purpose, while constantly monitoring the progress and results of initiatives such as Fujitsu Japan and JGG to achieve the goals of our Management Direction.

HOME

Creating Value for Customers with "For Growth" and "For Stability"

Fujitsu's Key Focus Areas-Message from the Head of Global Solutions Business

Fujitsu Group

Integrated Report

22

Fujitsu's Key Focus Areas-Message from the Head of Global Solutions Business

We will capture new markets and growth opportunities by creating social value in the seven Key Focus Areas in order to contribute to a better world.

Significance of Social Issues as a Starting Point for Growth

The world in 2030 is expected to be a very different place from now. The United Nations estimates that the world's population will increase from 7.7 billion in 2019 to about 8.5 billion in 2030.*1

The latest Intergovernmental Panel on Climate Change (IPCC) report predicts that global average temperatures will rise faster than previously expected.*2 On the other hand, there is no doubt that the evolution of digital technology is going to make possible the impossible. The year 2030 is also the time frame for the attainment of the 17 goals and 169 targets set out in the "Sustainable Development Agenda" of the United Nations Sustainable Development Goals (SDGs).

Megumi Shimazu

Corporate Executive Officer

SEVP, Head of Global Solutions Business

What kind of value will the Fujitsu Group provide to cus- tomers, to society, and to each individual during this process of change from now to 2030? The Fujitsu Group's growth strategy remains inseparable from imagining a better future for the world and thinking about the role we should play in realizing it. The needs and expectations of customers and society seeking change for the better will also offer new markets and growth opportunities. Based on this idea, we are now aiming for growth, focusing on social issues as a point of departure, and have specified seven Key Focus Areas that will drive business in the "For Growth" domain under the new business brand "Fujitsu Uvance."

*1 Source: UN, World Population Prospects: The 2019 Revision

*2 Source: IPCC, Climate Change 2021: The Physical Science Basis

Seven Key Focus Areas:

Horizontal Areas and Vertical Areas

The seven Key Focus Areas are divided into two categories: Horizontal Areas, which are the foundation to support the offering of diverse services to our customers, and Vertical Areas, which are cross-industry business areas that relate to solving different issues confronting society.

The Horizontal Areas include three fields: "Digital Shifts," which support data-driven decision making, operations, and workstyle innovation; "Business Applications," which provide cloud integration and applications; and "Hybrid IT," which provides cloud computing and security services for custom- ers' core systems. Within the three fields that compose the Horizontal Areas, we will make full use of the development and technological capabilities we have built up over the years to convert digital technology into value.

HOME

Creating Value for Customers with "For Growth" and "For Stability"

Fujitsu's Key Focus Areas-Message from the Head of Global Solutions Business

Fujitsu Group

Integrated Report

23

The Vertical Areas consist of the following four fields: "Sustainable Manufacturing," which realizes circular, traceable manufacturing focused on the environment and people; "Consumer Experience," which enables payment, retail, and logistics to deliver diverse experiences to consumers; "Healthy Living," which supports the wellbeing of all people; and "Trusted Society," which contributes to the creation of a safe, secure, and resilient society.

The Value We Provide

and the Technology That Supports It

In the following section, we want to introduce the value we provide to stakeholders and the technology that makes it a reality, taking Trusted Society as an example. Natural disasters pose an increasingly serious threat in many parts of the world, and pandemics present another urgent, ongoing challenge to humanity. The Group will contribute to mitigating and minimizing the impact of such threats through predictions made possible by digital technology. The solutions used for risk prediction include technologies to process real-time data sent from sensors installed in various facilities and equipment with ultra-high speed and large-capacity computing infrastructure, as well as technologies to visualize the dynamics of society as a whole as a "digital twin." In this way, we aim to grow by combining computing with our various other proprietary technologies and "building new possibilities by connecting people, technology, and ideas."

Accelerating Transformation

Based on Key Focus Areas

One reason for adopting terms like "Sustainable" and "Trust- ed" in the names of two of our Vertical Areas was to present the value we offer to our customers. Another reason was to clarify the value we offer and to carefully select services and solutions that match that value. In order for the Group to remain competitive and grow together with our customers in an ever-changing market, it would be meaningless if we were to just refresh the outer package and keep all the same services we have been offering.

To demonstrate Uvance's presence as a driving force behind the expansion of the "For Growth" sector as soon as possible, we are currently working rapidly to develop specific services, solutions, and service delivery systems organized and systematized for each Key Focus Area. We are also considering an organizational restructuring of the Group in order to achieve a better alignment between the Key Focus Areas and the organization and its human resources. To realize Our Purpose "to make the world more sustainable by building trust in society through innovation," we seek to provide real value to our customers and society at large by addressing social issues and seizing opportunities for growth.