1. Home
  2. News Releases
  3. Back Issues
  4. September FY2018
  5. METI Releases a Report on Digital Transformation: Overcoming of '2025 Digital Cliff' Involving IT Systems and Full-fledged Development of Efforts for Digital Transformation

METI Releases a Report on Digital Transformation: Overcoming of '2025 Digital Cliff' Involving IT Systems and Full-fledged Development of Efforts for Digital Transformation

September 7, 2018

The Ministry of Economy, Trade and Industry (METI) launched the Study Group for Digital Transformation in May, 2018. Since then, the study group has been researching and prioritizing current challenges involving IT systems that Japanese companies are facing in achieving digital transformations (hereinafter referred to as “DX”) and has been holding discussions on related measures, finally producing a report titled “DX Report: Overcoming of ‘2025 Digital Cliff’ Involving IT Systems and Full-fledged Development of Efforts for DX.”

New businesses have been appearing in all industries, employing novel business models based on game-changing digital technologies that disrupt established markets. Amid this trend, Japanese companies are required to swiftly advance DX to maintain or enhance their competitiveness. In this situation, some companies have launched efforts (e.g., establishment of a new department responsible for digital technologies) in order to address and advance DX. However, many such companies face difficulties in actually reforming their businesses through these efforts. While they invest in the efforts to some extent, (including taking concrete steps to investigate potential strategies) the success of their implementation has been inconsistent.

Such companies are facing challenges in defining future business strategies (e.g., approaches to changing business using a DX), which would allow them to take full advantage of DX. Meanwhile, as the existing systems tend to be overly-specific and outdated, some have mentioned the problem that [ⅰ] benefits derived from introduction of new digital technologies may be limited since data utilization and collaboration are also limited. Moreover, another problem is that many companies cannot allocate their resources to investment in new digital technologies due to the fact that human and financial resources are already deployed to maintain existing systems.

Meanwhile, new concerns are emerging that if companies ignore this situation, [ⅱ] they may face further maintenance cost hikes (due to exponential increases in future technical debt) and [ⅲ] a higher long-term security risks caused by a shortage of human resources that are trained to maintain the existing systems.

Not all companies, of course, constantly face the problems mentioned above, as some companies have succeeded in solving the problem of closed-ness of the existing systems, or others that had not yet invested in now-outdated, large-scale IT systems or cutting-edge companies that are pioneers in introducing IT systems. However, overall, a significant percentage of companies are considered to be facing the above problems.

Against this backdrop, the study group considers upgrading IT systems to an appropriate level as a significant challenge for Japanese companies in carrying out a future DX and held discussions focusing on current challenges that Japanese companies are facing in achieving DX and on measures for overcoming the challenges.

In order to update IT systems appropriately, companies need to develop strategies for the utilization of digital technologies in their businesses. Establishing internal systems and frameworks for implementation of such strategies is critical for their success. The study group held discussions to overcome these issues as well.

In May 2018, METI established the Study Group for Digital Transformation (chair: Dr. Mikio Aoyama, professor, Department of Software Engineering, Faculty of Science and Engineering, Nanzan University). The study group held four meetings ending in August 2018 and compiled the discussion results mentioned above into a report.

Appendix

Division in Charge

IT Innovation Division & IT Industry Division, Commerce and Information Policy Bureau