Management Strategies of NEC System Technologies |
February 16, 2004-NEC System Technologies, Ltd., formed by the consolidation of five NEC Software companies in October 2001, has been expanding market share with IT platform software development and SI services as the axis. The synergy of these two technology competencies has resulted in strong growth. The significant boost in earnings has resulted from our expanded development of middleware that serves an essential role as platform for Open Mission-critical Systems; for developing software for mobile phones; for constructing application and infrastructure for government offices, public organizations and corporations. We have also strengthened our management and earnings base, and listed our stock in the Tokyo Stock Exchange first section in September 2003.
With ongoing fusion of IT- and network technologies in the global rush toward a ubiquitous-network society, efforts to develop technologies and introduce products that support new business opportunities are accelerating. As a system technology innovator that creates key technologies for such environments, NEC System Technologies is stepping up technological development to meet IT users' needs, secure business opportunities, and achieve growth. As we compile a new management strategy around the "Next Challenge," we will put the following measures into practice. In the mid-term, we target 100 billion yen in sales, with an average of 9-10% annual growth, an ordinary profit margin of 11% or above, and ROE of 14% or above.
| 1. |
Business expansion
As mid-term management policies, NEC System Technologies aims for:
| - | Development of platform software that supports ubiquitous-network society |
| - | Deployment of end-to-end solutions that utilize our platform technologies |
to achieve further growth.
| (1) | Development of platform software to foster growth of the ubiquitous-network society
Platform software is a core technology that supports various applications and services on a ubiquitous network, and it is increasingly becoming the infrastructure that links public organizations, corporations, and individuals. To contribute to the realization of a rich, ubiquitous-network society, we will expand business primarily in the area of developing ubiquitous network platform software. Specifically, we will concentrate our development resources on three essential areas - then go one step further by dedicating our research institute System Technologies Laboratories to new technologies that apply to future ubiquitous-networking and promote technology-led commercial practices.
| 1) |
Expansion of middleware development for the broadband- and ubiquitous-network fields
We will further upgrade development technologies of open mission-critical platform software - "VALUMO-wear"* - to develop ubiquitous-network middleware. In the security field, we will respond to growing demand by promoting proprietary packaged software development and by providing security construction consulting to offer total professional services ranging from development to SI.
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| 2) |
Expansion of mobile platform software development
Taking advantage of our strength in element technologies and packaging technologies - such as Java platform for mobile phones, camera and other multimedia platforms and mail platforms - we will focus on developing platform software for next-generation mobile phones. We will also intensify our concentration on middleware development for Linux - widely seen as the next-generation mobile phone OS - to target the de-facto standard of 3G mobile phone platform software.
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| 3) |
Full-fledged efforts in the software field
Based on our software packaging technology for mobile phones and PCs as well as hardware design and firmware development technologies, we will fully launch an embedded-software business for various areas of ubiquitous networks as a driving force following middleware and mobile phone software. We will consider alliances with electronics and venture companies for generation of business opportunities.
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| (2) |
Offering a end-to-end solution that utilizes platform technologies
In the SI Services Business, we will step up end-to-end solution packages that utilizes IT platform development technologies.
For the public service sector, our goal is to broaden system platform construction - to target e-Government, e-Municipalities, and the consolidated municipalities - and system integration based on platform construction. For medical services, we will enhance solutions to support IT investments in hospitals such as electronic medical charts and electronic ordering.
Targeting the corporate market, we will expand construction of Open Mission-critical Systems and strengthen such solutions as CRM, ERP and traceability.
In addition, we will step up platform services. Efforts will focus on infrastructure construction and IT management services of information systems -- areas that require advanced platform technologies and SI technological expertise -- and promoting outsourcing business that leverages our technological competitiveness as added value.
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| 2. |
Strengthening management base
Management base enhancement to support growth will include:
| - | Sustaining and expanding profitability by strengthening cost competitiveness |
| - | Reinforcing technical expertise and project management capabilities |
| (1) |
Strengthening cost competitiveness
In addition to improving pricing practices, NEC System Technologies plans to double overseas outsourcing resources from current 800 members in an effort to further reduce cost. Use of top-flight engineers and Web tracking will insure quality control and program management best practice. Our proprietary development framework and production technologies will continue to reduce effort expended and time-to-completion, at the same time improving cost efficiencies and risk management in line with our fundamental value propositions.
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| (2) |
Reinforcing technical expertise and project management capabilities
Focusing on internal project management knowledge sharing, NEC System Technologies is deploying a project management guide - drafted based on collected in-house case studies. Company-wide dissemination will systematically strengthen project management practice and reinforce skills. At the same time, we will increase technical training opportunities and interaction with universities and technology organizations to merge keen business sense with the strong, team-based project experience of our super-SE and super-engineer resources.
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| 3. |
Investing for growth
NEC System Technologies plans to invest 10 to 12 billion yen over next three years in the following four areas: research and development, alliance and M&A, in-house IT strengthening, and training and human-resource development. In the R&D area, we will specifically promote middleware development for the ubiquitous-network field and proprietary software products.
By taking into consideration the anticipatory investment for business growth - 1-2% of sales, we target ordinary profit margin of 11% or above.
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| * | VALUMO is the registered trademark of NEC Corp. VALUMO-ware is a middleware product group for realizing Open Mission-critical Systems that combine solidity and flexibility. |
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