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Assessment Indices for Digital Management Reforms (“DX Promotion Indices”) Compiled

July 31, 2019

The Ministry of Economy, Trade and Industry (METI) compiled guidelines titled “‘DX Promotion Indices’ and Guidance Therefor” for the purpose of encouraging Japanese companies to promote digital management reforms. This compilation of indices is a tool to help companies: diagnose themselves in a simple manner and have opportunities for sharing the recognition of current situations of and challenges in their efforts for DX promotion among executive managers, personnel responsible in the business operation, DX, IT and other departments and other stakeholders; and utilize the results of the gained awareness to guide future actions.

Moreover, as METI considers it important to contribute to accelerating discussion at boards of directors, it also formulated “Items for Assessing Effectiveness of a Board of Directors in Advancing DX Promotion” as a reference that companies can make use of in their assessment of the effectiveness of their board of directors, an effort required for companies under the Corporate Governance Code.

Furthermore, aiming to assist companies in ascertaining the current situations of their efforts for DX promotion through comparison with those of other companies, METI provides opportunities for such companies to submit the results of their self-diagnoses to a neutral organization. In this service, the neutral organization will analyze the results of company self-diagnoses based on the data that the organization has collected and will prepare benchmarks to compare their results with comprehensive data.

1. Background

In recent years, a growing number of new entrants have been appearing and deploying cutting-edge business models using data and new digital technologies as game changers that cause new trends in all industries. Amid this period of change, Japanese companies need to swiftly advance digital transformation (DX) to maintain or enhance their competitiveness. However, many companies are facing difficulties in leading their ongoing empirical approaches to business reforms.

Promoting DX requires changes not only in conventional approaches to businesses but also in corporate cultures. To this end, it is indispensable for companies to: share the recognition of current situations of and challenges in their efforts for DX promotion (e.g., value to be created from the viewpoint of customers through DX) as well as the reasons for the need of target reforms and approaches to changing the conventional management framework to achieve DX among executive managers, personnel responsible in the business operation, DX, IT and other departments and other stakeholders; and take necessary actions based on the results of such awareness.

To encourage companies to advance such changes, METI decided to formulate “DX Promotion Indices” based on suggestions and other information presented in the DX Report: Overcoming of ‘2025 Digital Cliff’ Involving IT Systems and Full-fledged Development of Efforts for DX, which METI released in September 2018. This compilation of indices is a tool to help companies have opportunities for: sharing the recognition of current situations of and challenges in their efforts for DX promotion among business operators and internal stakeholders; and utilizing the results of the awareness to guide future actions.

In this context, METI established two bodies - a plenary session and a working group - for discussing related issues, , which in turn held discussions until March 2018. Following this, METI developed prototype indices and offered them to about 30 companies for test use and collected opinions on the indices from such companies. Finally, based on such opinions and other information, METI compiled the “‘DX Promotion Indices’ and Guidance Therefor.”

2. Details of the DX Promotion Indices

The DX Promotion Indices, a tool to help companies diagnose themselves in a simple manner, expect executive managers and personnel responsible in the business operation, DX, IT and other departments to hold discussions on respective questions and answer them.

Specifically, the DX Promotion Indices consist of two parts as below.

  1. Indices for ideal approaches to management for promoting DX and systems therefor
    Items: Framework for DX Promotion (qualitative indices) and Current Situations of Efforts for DX Promotion (quantitative indices)
  2. Indices for development of IT systems as a foundation in achieving DX
    Items: Framework for Development of IT Systems (qualitative indices) and Current Situations of Efforts for Development of IT Systems (quantitative indices)

These qualitative indices consist of 35 items and METI selected them focusing on challenges that Japanese companies are facing and necessary actions that they should take in overcoming such challenges.

 

3. Formulating benchmarks

METI provides opportunities for companies to submit the results of their self-diagnoses to a neutral organization.* In this service, the neutral organization will comprehensively analyze the results of companies’ self-diagnoses based on the data that the organization has collected and will prepare benchmarks using which companies are able to compare their own results with comprehensive data. Making use of these benchmarks, companies are expected to ascertain the differences between their situations and those of other companies and to enrich understanding of the next actions they should take.

*Note: As a temporary measure, METI will receive the results of the self-diagnoses from companies and collect and analyze them. Soon after METI determines the neutral organization, scheduled to be selected around September 2019, the selected organization will collect and analyze such results. Please note that these results of the self-diagnoses and personal information that companies have offered to the organization will not be publicized.

Submission counter: Personnel in charge of DX, IT Industry Division, Commerce and Information Policy Bureau
E-MAIL: meti-dx@meti.go.jpメールリンク

4. Items for Assessing Effectiveness of a Board of Directors in Advancing DX Promotion

In promoting DX, roles that directors or a board of directors, serving as management supervisors, should play are very important, as well as efforts undertaken by business operators, personnel responsible for implementing digitalization in the business operation, DX, IT and other departments and other stakeholders.

In this context, as METI considers it important to contribute to accelerating discussions at boards of directors, and based on the details of the DX Promotion Indices, it also formulated “Items for Assessing Effectiveness of a Board of Directors in Advancing DX Promotion” as a reference that companies can make use of in their assessment of the effectiveness of the board of directors, an effort required for companies under the Corporate Governance Code.

METI expects companies to make use of the Items for Assessing Effectiveness of a Board of Directors in Advancing DX Promotion and thereby accelerate discussions on their efforts for DX promotion at the board of directors as well.

Division in Charge

Software and Information Service Industry Strategy Office, IT Industry Division, Commerce and Information Policy Bureau

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