No.2487
08/25/2020

Digital Transformation (DX) Market in Japan: Key Research Findings 2020

Yano Research Institute (the President, Takashi Mizukoshi) carried out a survey on the attempts for digital transformation (DX) at domestic enterprises and analyzed the eagerness toward DX.


Results of Corporate Questionnaire on Eagerness for DX
Results of Corporate Questionnaire on Eagerness for DX
Eagerness toward DX (Aggressive) by Industry
Eagerness toward DX (Aggressive) by Industry

Summary of Research Findings

This research categorized DX into two types: “Innovative DX (aggressive DX)” and “IT refurbishment (passive DX).” The former is to develop innovative products and services, and to bring about innovation to business models. The latter is to refurbish mission-critical systems, facilitate telework, streamline existing tasks, and renovate working processes and corporate/organizational culture. The questionnaire was sent to 523 domestic private companies and public institutions to find out the enthusiasm for achieving DX.

The questionnaire aimed to find out eagerness in companies and organizations toward innovative DX and IT refurbishment respectively, by classifying their attempts to achieve DX into 8 stages where the larger the value is the more enthusiastic the attempt is. For instance, if a company specified “8” for the DX attempt, the company has utmost eagerness to achieve DX, while 5 indicates average, and 1 indicates that the company has never heard of DX before.

The average values obtained from 523 private companies and public institutions were 3.37 for Innovative DX and 3.78 for IT refurbishment, both values were below 5 that is the average value. The results showed how companies and organizations in Japan were unmotivated in DX. As IT refurbishment attained larger value than Innovative DX, though only slightly by 0.41, the eagerness was slightly larger in IT refurbishment than Innovative DX, which be seen from the current reality in Japan.

The ratio of those companies that responded 1 (heard for the first time) for IT refurbishment (passive DX) was 2.3% (12 companies and organizations), but the ratio of those that responded 1 for Innovative DX (aggressive DX) was 20.5% (107 companies and organizations), showing how low the awareness of Innovative DX was. There is no time for the vendors to enlighten DX to the user companies and organizations. 

Noteworthy Topics

Service Industry Having High Potential for Achieving DX

The figure “Eagerness toward DX (Aggressive) by Industry” is analyzed from the corporate questionnaire as well as a survey to DX related vendors.

The industry that obtained the highest value in willingness toward Innovative DX was service.

Of course, there are various services in the industry, so that the eagerness differed by service category. While the companies in transportation, construction, and medical care were eager in DX, many food service companies remained using only SNS for marketing and attracting customers, and introducing just cashless payment. The real estate industry was one of the industries that had long failed to deploy DX. However, the status under COVID-19 pandemics started changing their business: While they have faced difficulty in performing face-to-face sales activities or in showing estates or/and rooms, cancellation of contracts and reduction in rent have increased. These factors are expected to increase potential demand for DX.

For the financial service industry, the latest survey showed somewhat low eagerness, but it may be because the industry has already made some progress in Innovative DX, which led the motivation toward DX to subdue at this point. Promotion of DX has been generally initiated by major enterprises, and passed along to smaller-size companies within an industry. Currently, hardly any small-to-midsize companies are engaged in DX yet, except for the companies imminently in need of DX to cope with telework and other COVID-19-related motivations. Therefore, to complete assessment of the current condition is not possible by a single measure, which is by industry.

Research Outline

1.Research Period: May to July 2020
2.Research Object: Domestic DX vendors, private companies and public institutions and organizations
3.Research Methogology: Literature research by the expert researchers, survey via telephone and email, and corporate questionnaire

The Digital Transformation (DX) Market

According to Guidelines for Promotion of Digital Transformations (DX Promotion Guidelines) by METI, digital transformation indicates establishment of competitive edge by utilizing IT i.e. data and digital technologies.

This research categorized DX into two types: “Innovative DX (aggressive DX)” and “IT refurbishment (passive DX).” The former is to develop innovative products and services, and to bring about innovation to business models. The latter is to refurbish mission-critical systems, facilitate telework, streamline existing tasks, and renovate working processes and corporate/organizational culture. This research aimed to find out the trend of digital services and solutions necessary for achieving DX.

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Digital Transformation (DX)

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