Nomura Research Institute : Growth Strategy

Growth Strategy

Looking Back on Past Medium-Term Management Plans

		Vision2015
		NRInnovation!		Medium-Term Management Plan (2016-2018)
		FY March 2009 - FY March 2016			FY March 2017 - FY March 2019
Objectives		To provide a business platform that laterally spans the
	industry and market
		Growth higher than industry average and profitability set NRI apart		Improve productivity in specialty areas in Japan
		in the industry		• Hardly any unexpected large-scale unprofitable projects
		• Growth potential: 7% growth		• Improved productivity by integrating business platform development
	• Profitability: 13% OPM or more		systems and implementing development management integration tool
		Expand industry-standard business platforms and develop
		Powerful business portfolio
			large-scale clients
	• Break dependence on two major clients
		• In Industrial IT, major progress has been achieved in the context of
		(Expand business from clients other than two major clients)
			DX, and great progress has been made in development of large-
		58%   74%*
			scale clients
Strategy		• Expand business in industrial sector		• In Financial IT, worsening business conditions of clients had an impact
	19%   24%*		but business platforms grew, and large-scale projects were also acquired
and
		• Expand number of clients to whom sales was ¥1 billion or more
main		• Expand industry standard business platforms
	64 firms   86 firms*
results		12%   22%*
			Build foundations for global business
	• Expand overseas-related business
	• Business in Australia is progressing smoothly, mainly with ASG
		1%   6%*
			• Initiated more governance improvements in conjunction with global
				business expansion
				Create business IT
			• More projects involving D2C, digital marketing, and analytics
			• Greater proficiency in agile development for BiT, and productivity
				has improved
			• Collaborative models have been achieved by establishing joint ventures
		Introduce THE STAR to Nomura Securities Co., Ltd.		Expanding the number of companies using industry standard busi-
		Established and acquired subsidiaries in the industrial field		ness platforms
					73 firms*
		• Acquired NRI System Techno, Ltd. (2012)		• THE STAR:	68 firms
	• Established Marubeni IT Solutions Inc. (2014)		• BESTWAY: 109 firms	114 firms*
	• Acquired Brierley+Partners, Inc. (2015)
		• T-STAR:	73 firms	75 firms*
		Started provision of new industry standard business platform
			Global acquisition
Specific		services
	• North America: Cutter Associates, LLC (2016)
initiatives		• Online banking system "Value Direct"
• Australia: ASG Group Limited (2016), SMS (2017)
	• Solution supporting financial institutions' retail sales representa-
		tives "Advisor Platform"		Established joint ventures

• • STP platform solution for asset managers "SmartBridge Advance"   • KDDI Digital Design Inc. (2017)

	• My Number management services "e-BANGO"		• Technium CO., LTD. (2018)
	Established overseas bases		• NDIAS, Ltd. (2018)
	• Moscow, Dalian, India, Indonesia, and Thailand		• JAL Digital Experience Co., Ltd. (2019)
	* All percentages (%) are the sales ratio form FY March 2008 to FY March 2016		* Number of firms from FY March 2016 to FY March 2019
Revenue
(billions of yen)		Vision2015		Vision2022

Medium-TermManagement Plan (2016-2018)Medium-Term Management Plan (2019-2022)

600					550.3
			528.8	528.7
		501.2	43.6
		46.7	46.7
		53.0
450	421.4
342.2	14.6
300
150
0
08.3	16.3	19.3	20.3	20.3	21.3
			JGAAP	IFRS

Revenue  Overseas revenue

36 Nomura Research Institute

Vision2022

Share the Next Values!

Medium-Term Management Plan (2019-2022)

FY March 2020 - FY March 2023

Expand the customer base and take on the challenge of

new areas, including global and digital

			DX Strategy P.40						Revenue	¥670 billion or more
			Business Platform Strategy					Operating profit	¥100 billion
			P.41
	Growth						Target		Operating margin	14 % or more
	Strategy
		Cloud Strategy	P.41
							Overseas revenue	¥100 billion
			Global Strategy	P.42
							EBITDA margin	20 % or more
			Human Resources Strategy
			P.44				ROE	14 %*
									* Awareness of the European/U.S. level (20% level)

Operating Profit / Operating Margin / ROE

(billions of yen)	Vision2015		Vision2022

Medium-TermManagement Plan (2016-2018)Medium-Term Management Plan (2019-2022)

100						40
			83.1	85.6	80.7
75		71.4				30
52.6	58.2		20.3
		18.3	18.2
50				20
15.4	13.8	14.3
			15.7	16.2	14.7
13.3
	12.3
25	10.6				10
0						0
08.3	16.3	19.3	20.3	20.3	21.3
			JGAAP	IFRS

Operating profit  Operating margin  ROE

Integrated Report 2021 37

Growth Strategy

Vision2022 and Medium-Term Management Plan Overview and Progress Status

As we aim for the final goal of V2022, NRI is moving forward with the Medium-Term Management Plan (2019-2022), the four-year second half of V2022. In FY March 2021, the second year of the Plan, the growth strategy of the Medium-Term Management Plan progressed steadily, and we achieved a high level of performance.

Long-Term Management Vision "Vision2022"

In April 2015, NRI launched its long-term management vision "Vision2022" (V2022), the final year of which is FY March 2023. It was created to realize NRI's corporate philosophy of "Dream up the future." NRI is positioning itself as a corporation that boldly tackles truly meaningful innovation based on its commitment and strengths.

• In order to create the ideal future society, NRI will achieve its goals by further refining the three strengths that we have cultivated thus far; namely, insight, the ability to achieve, and the ability to co-create, and by achieving our five growth strategies.

5 Pillars of Vision2022 Growth Strategy

1

Dramatic expansion of

globalization

2	4
Enhancement of	Further pursuit of
IP portfolio	innovation in production

3

Promotion of

business value creation

5

Cooperation and collaboration of

diverse talents

Vision Statement

We have imbued our thoughts for achieving V2022 into our vision statement "Share the Next Values!" With this in mind, each NRI employee is embracing the challenge of achieving new value.

Share

Next

Values

The diverse variety of personnel within the NRI Group joins together to pool their collective effort, and share the achievements and joy of contributing to a vibrant future society together with our clients.

With the mentality of being ahead of the times we pioneer globally, digitally, and into the realm of the future, to create new business models for the next generation.

We refine our strengths and create value by providing various types of services to clients and to society, giving birth to new future-minded business models.

38 Nomura Research Institute

NRI Sustainability Management Policy

NRI growth

Building sustainable futures

Corporate philosophy "Dream up the future."

Vision2022 financial targets

Operating profit	¥100 billion
Operating margin	14% or more
Overseas revenue	¥100 billion
ROE	14%*

• Aiming for higher capital efficiency as continu- ing from the previous term

NRI Sustainability Management

Medium-Term Management Plan (2019-2022)

NRI's 3 Social Values	Co-create a thriving
(Solving Social Issues
future society
through Value Co-creation)	by driving new value.
Co-create an ideal society	Co-create a safe and
by effectively utilizing its	secure society
resources.		by advancing its infrastructure.

Materiality for sustainable growth

Reduction of environ-		Provision of opportuni-		Compliance with laws,		Management of the
mental impact for		ties for all kinds of		regulations, and risk
			information systems that
preserving the global		professionals to take on		management to increase
			form social infrastructure
environment		challenges		trust from society

Medium-Term Management Plan (2019-2022)

The Medium-Term Management Plan (2016-2018) was launched in April 2016 as the first step toward achieving V2022. In FY March 2019 (the final fiscal year), we were able to achieve the originally planned goals of ¥500 billion in revenue and ¥70 billion in operating profit.

• NRI launched the Medium-Term Management Plan (2019-2022), the four-year second half of V2022 that aims for the final goal of V2022, in April 2019. As the digital transformation of society speeds even faster ahead, NRI is moving forward with the three growth strategies of (1) DX Strategy, (2) Global Strategy, and (3) Human Resources Strategy, in order to achieve both resolution of the issues of our clients and society and the growth of NRI's businesses.

Growth Strategy of Medium-Term Management Plan (2019-2022)

DX Strategy	Use technology to transform customer business models and processes
Business Platform Strategy	Evolve business platforms (BPFs) in finance
Cloud Strategy	Modernize legacy systems by using cloud infrastructure
Global Strategy	Achieve more global business growth, seeking revenue of ¥100 billion
Human Resources Strategy	Strategic recruiting, talent development

Integrated Report 2021 39

Growth Strategy

The Three Growth Strategies and Progress Status of the Medium-Term Management Plan

DX Strategy

In recent years, movement toward DX has heightened due to an increase in IT investment for business models and work process transformation utilizing digital technologies. Furthermore, corporations are accelerating the speed of change, triggered by rapid changes in the business environment caused by the spread of COVID-19. NRI realizes client transformation by leveraging its strength of combining consulting and IT solutions, and by utilizing technology to provide comprehensive support from strategy formulation to solution implementation.

• NRI defines DX that contributes to business process transformation of existing businesses as "DX 1.0," and DX that uses digital technology to create a new business model itself as "DX 2.0." We are implementing initiatives for each type of DX. In the field of "DX 1.0," NRI is moving forward with many initiatives related to the streamlining of business and further sophistication of infrastructure, utilizing digital technology. The demand is high for infrastructure transformation of the launch of EC business and the accompanying distribution/inventory systems for clients in the distribution, manufacturing, and service industries, etc., in particular, and NRI is providing support for it. In the field of "DX 2.0," we establish joint ventures with clients and companies that have advanced technologies and promote the creation of new businesses utilizing digital technologies via collaboration. Also, NRI has newly defined DX that solves social issues and realizes a paradigm change as "DX 3.0."

Framework of NRI's DX Strategy

Social

transformation

Transformation of

clients and

industries

DX 3.0

DX 2.0

DX 1.0

Paradigm	Resolve social issues through co-creation with various partners
• Revitalize local communities through digital and entrepreneur support
transformation
• Digital solutions to reduce carbon, save resources, etc.

Business model	Establish innovative digital services
• Build	new multi-industry platforms
transformation
• Create	new business models and ecosystems for clients

	Digital front office	Digitalize actions for end users
Process	• D2C*,	CRM, digital marketing
transformation	Digital back office	Digitalize actions within client companies
	• SCM	reforms, AI & RPA, business platforms
Infrastructure	Enhance infrastructure such as cloud, security
transformation	• Support	migration to cloud, managed services, security business

* D2C (Direct to Consumer): Selling directly to consumers through e-commerce, etc.

DX 2.0 (Business Model Transformation) Expanding via Co-Creation with Customers

KDDI Digital Design Inc.

Established with KDDI CORPORATION in 2017. Provides total support from drafting of corporate DX strategy to commercial verification and system development/operation.

JAL Digital

Experience Co., Ltd.

Established with Japan Airlines Co., Ltd. (JAL), in 2019. Proposes personalized services for a rich experience and lifestyle during tourism and everyday life.

Technium CO., LTD.

Established with DMG MORI CO., LTD., in 2018. Leverages digital technologies to support high-level utilization of production equipment at plants, etc.

BOOSTRY Co., Ltd.

Established with Nomura Holdings, Inc., in 2019. Develops and provides transaction platforms that use blockchain technology for issuing and distributing securities and other rights.

NDIAS, Ltd.

Established by DENSO CORPORATION and NRI Secure in 2018. Provides security assessment and consulting services for onboard electronic devices for the automobile industry.

Financial Digital

Solutions, Ltd.

Established with QUICK Corp. in 2019. Uses the experience and know-how of both companies to develop efficient services for responding to changes in the environment surrounding financial institutions.

40 Nomura Research Institute