In addition to an overview of DX, we will introduce the reasons and benefits of DX promotion. We will also explain the issues that companies should address in the future, so if you are considering promoting DX, please take a look.
Table of contents
- 1. What is DX promotion?
- 1-1.Differences from IT
- 2. Background to the focus on DX promotion
- 2-1. Cliff in 2025
- 2-2.DX promotion guidelines
- 3. Benefits of promoting DX
- 3-1.Improving productivity
- 3-2. Enhancing BCP
- 3-3. Risk avoidance of legacy systems
- 4. Challenges for promoting DX
- 4-1. Presentation of clear goals and management strategies
- 4-2. Consistent system construction
- 4-3. Secure and develop IT human resources
- 5. Let’s take a step towards corporate reform by promoting DX
With the evolution of IT technology, there are more opportunities to hear the term DX promotion in various places these days. The importance of DX promotion is attracting particular attention in the business scene.
However, not many people clearly understand what DX promotion is and what DX is.
In this article, we will introduce an overview of DX as well as the reasons why DX promotion is attracting attention and its benefits. We will also explain the issues that companies should address in the future, so if you are considering promoting DX, please take a look.
What is DX promotion?
DX promotion refers to promoting DX (digital transformation) within a company.
DX is a concept proposed by Swedish university professor Eric Stolterman in 2004, which states that “ever-evolving digital technology will impact people’s lives and enrich every aspect of their daily lives.”
DX promotion is particularly important in business. The term is used not only to simply digitize business operations but also to use the latest IT technology to rebuild and transform an organization’s structure and framework.
Difference with IT
Both ITization and DX are used to mean introducing and utilizing digitalization, but there is a big difference in the final purpose.
ITization refers to the introduction of digital technology to streamline business operations, improve productivity, and reduce costs. DX, on the other hand, uses digital technology as a means. In the future, this initiative aims to encourage a wide range of changes in business models, organizations, and even new businesses, to establish a new company.
Background to the focus on DX promotion
Digitalization has significantly changed society, including changes in consumer behavior due to the spread of smartphones and an increase in remote work due to the impact of the coronavirus pandemic. As a result, companies that develop new business models, products, and services are appearing one after another.
For companies to survive in such a competitive society, it is necessary to transform by promoting DX.
cliff of 2025
“2025 cliff” is a keyword that cannot be ignored when promoting DX. “2025 cliff” is a term used in the DX report released by the Ministry of Economy, Trade and Industry in 2018. This report predicts that many problems will confront companies after 2025.
Looking at the trends of the times, the importance of DX is clear, but the current situation is that only some large companies are working on DX promotion.
The Ministry of Economy, Trade and Industry, feeling a sense of crisis about this current situation, has stated that if Japanese companies do not start digitalization by 2025, they risk incurring economic losses of up to 12 trillion yen annually from 2025 to 2030. I am strongly appealing.
DX promotion guidelines
In response to the 2025 problem, the Ministry of Economy, Trade and Industry published the “DX Promotion Guidelines” in the same year.
The DX Promotion Guidelines aim to clarify the matters and initiatives that managers should keep in mind when promoting DX, and include “management methods and mechanisms for promoting DX” and “building an IT system that will become the basis for realizing DX”. It consists of two parts.
It is hoped that these guidelines will help companies promote DX.
Benefits of promoting DX
Currently, various measures are being taken to promote DX across the country, but what kind of benefits can companies gain from promoting DX? I will explain it in detail below.
Improved productivity
The biggest benefit of promoting DX is the ability to improve work productivity and accuracy through digitalization. If you can optimize your operations through digitalization, you can expect to shorten work time, reduce labor costs, and even improve accuracy by eliminating human error.
If these effects are achieved, employees will be able to concentrate on more important tasks.
Enhancing BCP
A BCP (Business Continuity Plan) is a plan that determines measures to minimize damage and continue business operations smoothly even in the event of a crisis such as a disaster or system failure.
If you promote DX and improve operational efficiency, you will be able to respond flexibly to such unexpected situations. BCP is considered to be extremely important to be able to recover quickly and resume normal operations.
Legacy system risk avoidance
The biggest cause of the “2025 cliff” is the increasing complexity and black box nature of internal systems faced by Japanese companies.
It is said that in-house systems are often left unattended as they become complicated to use due to repeated improvements. If these old systems (=legacy systems) are left unattended, it will be difficult to improve productivity, and maintenance costs will be high. In addition, the lack of human resources who can handle these tasks without handover will cause the system to become a black box.
By reviewing and optimizing legacy systems through DX promotion, it is possible to avoid the risks of continuing to use them.
Challenges for promoting DX
We will introduce the issues that many companies are facing to realize DX promotion.
Presentation of clear goals and management strategies
Even if many companies understand the need to promote DX, many companies are still searching for a specific direction. If you try to implement DX without clear goals and management strategies, you will end up simply digitizing your business, which will be far from the original purpose of DX.
To successfully promote DX, it is important to first solidify your company’s business strategy rather than just a vague image.
Consistent system construction
Having legacy systems within the company is one of the reasons why many companies are slow in promoting DX.
The reason for this complexity is probably due to repeated system development from a short-term perspective, which has made it difficult to utilize data due to system enlargement and technological obsolescence. As a result, the system became a black box and accumulated technical debt.
When promoting DX, it is important to wipe out obsolete systems and build a consistent system.
Securing and developing IT human resources
In Japan, many companies rely on external IT companies because there are not enough IT personnel in upper management or the field who can promote DX.
Therefore, even if you want to start a new service, you will not be able to implement it immediately if you are dependent on other companies for system development. Securing and training IT human resources is a major challenge for companies to start service operations sooner than anywhere else.
As the competition for IT talent continues to intensify in the future, companies need to secure and develop their talented human resources to survive.
Let’s take a step towards corporate reform by promoting DX
So far, we have explained an overview of DX, the reasons and benefits of DX promotion, and the issues that companies should address.
Society is undergoing major changes due to the wave of digitalization. DX promotion is particularly important in the business industry, and many companies are being asked to transform.
To confront and overcome the problems we will face with 2025 as a turning point, we must tackle various issues from now on, including the promotion of DX.
Let’s clarify our company’s goals and take a step towards corporate reform with an eye on the future.
