How to Li Corporate IT i Japa Out of Surprisi gly Desolate Co di o

How to Li Corporate IT i Japa Out of Surprisi gly Desolate Co di o A Gi kgo Ma age e t Co sul g Pu li a o HAMBURG SHANGHAI SINGAPORE ZURICH

www.ginkgo.com Introduction Mu h to the su p ise of oth fi st e s to Japa o IT- elated issio s as ell as Japa ese IT p ofessio als the sel es, the state of o po ate IT i Japa o es o he e lose to the ou t s o e all eputa o fo i o a e ess, ualit, a d effi ie. Ope a o a d ai te a e of o po ate IT is o pa a el e pe si e a d e o epts that help oost IT effi ie all o e the o ld o e a e t i t odu ed u l ea s a e thei o ep o. What s o e, the e e tual i t odu o also takes sig ifi a tl o e e, people, a d o e tha o pa a le p oje ts i ost othe ou t ies. I this ote, Gi kgo ide fies a u e of ajo sho t o i gs t pi al of Japa ese o po ate IT, i es gates thei oot auses, a d p oposes p a al a o ite s desig ed to help Japa s CIOs lose up to the est of the o ld i te s of IT effi ie. Lars Godzik, Founding Partner, Ginkgo Management Consulting

www.ginkgo.com Shortcomings of Japanese Corporate IT Measu ed agai st glo al sta da ds, o po ate IT i Japa appea s su p isi gl diso ga ized a d i effi ie t, if ot letha gi. This is the e di t of a ea s of p a al e pe ie e i o sul g Japa ese e te p ises a d ul a o als ith p ese e i Japa o IT- elated usi ess issues. Fa f o lai i g u i e sal alidit, Gi kgo elie es that the follo i g sho t o i gs a e s pto a of a Japa ese IT o ga iza o s: e u e a tl g o IT e i o e ts, e essi el usto ized s ste s, st o g e do depe de, sluggish adop o of i o a o, a d i effe e p oje t a age e t. I the follo i g, ea h of these sho t o i gs ill e a al zed ith espe t to its sig ifi a e a d espe e oot auses. I. EXUBERANTLY GROWN IT ENVIRONMENTS La k of IT Strateg & Go er a e. I Japa, as opposed to the est of the o ld, de elopi g a o pelli g IT st ateg, i.e., a lea a d o p ehe si e aste pla fo all of o po ate IT, is ot see as the fi st dut of e e CIO. I fa t, it s ha dl see as a ajo dut at all, a d eithe is esta lishi g effe e IT go e a e, the ules a d poli ies of IT a age e t. La ki g a o o goal a d lea guideli es, a age s a e fo ed to ake de isio s ased o i tui o athe tha pla. I o se ue e, the IT e i o e ts of a Japa ese o pa ies ha e ee g o i g o ga i all hi h is ot to sa hao all e e si e thei i ep o. Colle o of Isla d Ki gdo s. Mo eo e, the fa t that IT staff i Japa despite a o e p o lai ed e d of life e e plo e t sho s e li le tu o e a d ota o leads to the de elop e t of o po ate IT e i o e ts that ot o l la k lea a hite tu e, ut also a e hea il f ag e ted. A d si e the i di idual f ag e ts, o i f ast u tu al isla ds, ha dl e e eed to e ha ded o e, the a e e e less do u e ted tha thei ou te pa ts i ou t ies ith highe staff tu o e, a fa t that e de s a e dea o ai ed at i t odu i g effe e e te p ise a hite tu e sta da ds sig ifi a tl o e diffi ult.

www.ginkgo.com Co se sus Lea i g Ma age e t St le. Maki g thi gs o se, Japa ese a age e t st le fa o s de isio s ased o o se sus o e de isio s ased o e o e da o s of i di iduals assig ed to a e tai topi. IT, ho e e, p efe s st o g de isio s ze o o o e o e eak o p o ises. O a si ila ote, Japa ese CIOs do t feel the u ge to ha ge e e thi g upo thei appoi t e t, a u ge that is so o o i Weste o po a o s. I stead, the athe lea e thei a ks slo l a d steadil k eadi g o po ate IT th ough a ete al se ies of o p o ises. This is t ad o l. Fo i sta e, it keeps the isk of se i e dis up o s at a i i u. Yet, the e its of a o plete o e haul should ot e u de es ated p o ided it follo s a lea, effe e, a d effe el o u i ated o e all IT st ateg. Natu all, a e u e a tl g o i g IT e i- o e t is ostl to ope ate a d ai tai, al ost i possi le to sta da dize, a d i easi gl o ple to u de sta d fo e hi es a d outside s, a d thus ot o l d i es do effi ie, ut also poses ou g usi ess o uit isks. The lo ge a CIO allo s his o po ate IT to sp a l, the ha de its e e tual t a sfo a o i to a state-of-the-a t e te p ise a hite tu e. Background Information Too Customer-Focused How is that Possible? It is a a epted est p a e to o ga ize usi ess a d o po ate IT i a usto e / se i e p o ide ela o ship. Doi g so has p o e e efi ial to the alig e t of usi ess a d IT a d, thus, o e all effi ie. Japa, ho e e, appea s to ha e take this o ept too fa : o po a o s ot o l ha e ade usi ess u its usto e s, the ha e ade the Japa ese usto e s, i.e., gods, ot ki gs. A d hile ki gs though po e ful s ll a e e ep e to ad i e, gods a e ot. Japa ese usto e s o de, se i e p o ide s deli e, e a tl as o de ed. Of ou se, this usuall is t a p o le a ut e jo a le p a e, also fo the se i e p o ide fo Japa ese usto e s k o the a e e pe ted to pa ha dso e o pe sa o fo good se i e. I the o te t of o po ate IT, ho e e, this o e e ele e t is issi g. IT depa t e ts o edie tl fulfill ea h a d e e e uest ithout e e passi g a ill, let alo e dis ussi g a e uest s o se ue es fo o po ate IT, o a e ho disast ous. If usi ess a d IT e gaged i a ope dialogue at e e-le el, o p o ises that op ize usi ess alue ould e ide fied a d e uests p io i zed.

www.ginkgo.com II. EXCESSIVE CUSTOMIZATION Fla ed Self- o ep o of IT Depart e ts. I ost pa ts of the o ld, p o ess fit a d effi ie a e o side ed ell efo e usa ilit a d i di idual use sa sfa o. I Japa, he e use s a e see as usto e s a d IT depa t e ts as p o ide s of IT se i es, this o de has ee e e sed. Use sa sfa o is held highe tha p o a l a he e else i the o ld. ee Too Custo e -fo used Ho is that Possi le? A o di gl, IT desig de isio s a e d i e athe usi ess ep ese ta es pe so al p efe e es tha effi ie o side a o s, oute appea a e t u ps p o ess fit a d a hite tu al e its. t i i g to ate to ea h a d e e pe so al e ui e e t, IT depa t e ts o e fi d the sel es de elopi g ostl usto solu o s f o s at h i stead of adap g ost effe e a d e-tested sta da d solu o s, the p i e ta get of IT depa t e ts all o e the o ld. This p a e adds to afo e e o ed a hite tu al edla a d f e ue tl fo ids the appli a o of e o o i all a a e p odu t updates altogethe. O edie e to Hierar hi al Authori es. U o di o al ag ee e t to i di idual usi ess usto e s p efe e es is t the o l e a ple of a so e hat isguided se se of dut. Japa ese e do s a e e uall k o fo st i i g to fulfil ea h a d e e ish a IT depa t e t a ulates ithout e e da i g to halle ge a of these e uests f o a a hite tu al sta dpoi t, let alo e p o ide the IT depa t e t ith i al feed a k i the ase of u health ost- e efit i ala es. Pride i O Pe uliarit. Ce tai l, Japa as a ou t diffe s i a a s f o ost othe ou t ies, a d the Japa ese a su el e p oud of thei ou t s a d peoples dis e i tues. O e, ho e e, ei g diffe e t is p ese ted as a i tue i itself a i tue of ues o a le usi ess alue that is f e ue tl applied to jus f e essi e usto iza o. E essi e usto iza o hi de s sta da diza o a d, thus, dep i es CIOs of a ajo ea s of ost edu o. It also i eases the eed fo t ai i g of e d use s as ell as ope a o a d ai te a e staff. Bala i g the p os a d o s of adapta o a d usto iza o isel ust e a ajo dut of IT a age e t.

www.ginkgo.com III. HESITANT INNOVATION Natural La guage Barrier. Co po a o s, espe iall those i highl de eloped ou t ies, eed to e a e i o a o so as to etai thei o pe e ess. This applies to all fu o s, IT i luded. Japa s atu al disad a tage i te s of la ki g p ofi ie i the E glish la guage, the li gua f a a of IT, o i ed ith o pa a el slo p og ess i o e o i g this disad a tage, leads to a sig ifi a t dela efo e ajo i o a o s a e o side ed, let alo e i t odu ed, as all sou es ha e to e t a slated fi st. Distrust of E er thi g No -Japa ese. O e sho t ut to i o a o fo ou t ies la ki g IT e gi ee s flue t i E glish is the ell- a aged a a o of fo eig tale t. I Japa, ho e e, p e aili g a age e t st u tu es as ell as la guage a d ultu e- elated o u i a o issues p e e t i o a o th ough fo eig tale t f o assu i g a sig ifi a t p opo o s. Li le Orga iza o al Lear i g. What s o e, p e iousl e o ed o edie e to autho i es also i pedes o ga iza- o al lea i g. IT depa t e ts, eage to sa sf ea h a d e e e uest, ha dl e e self-i i a el o f o t usi ess u its ith sugges o s ho to e efit f o e l a aila le te h ologies. The sa e holds t ue fo IT e do s, although to a s alle e te t as the la e ha e a di e t i e e to push i o a o the eed to sell p oje ts. Fo o po a o s i high- age ou t ies, o uous i o a o is a dato. Co pa ies that fail to e a e i o a o isk thei o pe e ess. As te h ologi al i o a o is of pa ula i po ta e, CIOs a ot affo d to let thei o ga iza o s fall ehi d i te s of IT i o a o ut ha e to pla fo it a el.

www.ginkgo.com Real-life Experience Improbably Customized SAP Modules A la ge Ge a a ufa tu e o de ed the CIO of a e e t Japa ese a uisi o to g aduall adopt the o po a o s glo al sta da d s ste s. Ala ed f e ue t epo ts of p oje ts that e eed e a d udget as ell as ge e all sluggish pe fo a e, the g oup CIO asked Gi kgo to a al ze the situa o. O site, Gi kgo ide fied e essi e usto iza o due to a isguided eage ess to fulfill e e usi ess e uest a d eak p oje t a age e t as ai ulp its fo the ise. The i t odu o of o o AP odules, fo i sta e, had tu ed i to a a oth p oje t that despite its o siste tl g ee status lights ul atel took th ee es as lo g as p oje ted a d i u ed osts of si ila l f ighte i g di e sio s. Up a d u i g, the s ste suffe ed f o f e ue t data i egula i es a d ai te a e osts eight es the e h a k. IT s illi g ess to gi e i to e e usi ess e uest led to the de elop e t of a o olithi o ste so usto ized o ABAP-le el, i d ou! that it is diffi ult to e og ize the sta da d s ste it is ased o. This fa t is likel to p o e fatal o e the o ga iza o de ides to upg ade its glo al sta da ds as the la e if possi le at all ost e tai l ill ot o l e ostl a d e o su i g ut also e ui e the i ol e e t of the s ste s o igi al eato s a lo k-i situa o likel to e el o ed the espe e e do. IV. LACK OF QUALIFIED, EXPERIENCED STAFF I suffi ie t For al Edu a o. A othe easo fo the disappoi g o di o of Japa ese o po ate IT a e fou d i the la k of fo all ualified staff. The la e appea s to lie i pa t ith the Japa ese edu a o s ste hose u i e si es, hile st o g i a ade i esea h, o e do ot p epa e stude ts fo eal life a d also a e t e pe ted to do so. I stead, o pa ies o side it thei dut to e te si el t ai e hi es. The p o le ith this app oa h i the o te t of o po ate IT is that o -the-jo t ai i g does ot tea h e hi es the fo al e te p ise a hite tu e o epts e ui ed to keep a IT e i o e t up-to-date ut the p a al skills e essa to ope ate a d ai tai the la e s status uo.

www.ginkgo.com Fe E ter al Hires. The Japa ese usi ess t adi o to hi e st aight f o u i e sit a d etai staff u l e e e t adds to this p o le. Although the o ept of life e e plo e t has eake ed th oughout the past de ade, o po a o s s ll a el hi e e pe ie ed IT p ofessio als, effe el a a do i g a p o isi g op o to lea a out the app oa hes a d est p a es of IT depa t e ts else he e. Li le I ter al Rota o. But e e ithi IT depa t e ts the e is li le to o ota o a d, he e, li ited t a sfe of k o ledge, a d est p a es et ee the depa t e ts i di idual isla ds - a aste of op iza o pote al. A IT staff of sou d a d fo al edu a o, ell- ou ded e pe ie e, a d hete oge eous a kg ou d is e e CIO s est eapo i his fight fo o po ate o pe e ess. U fo tu atel, p e aili g ualifi a o gaps, o e ide fied, a ot e losed o e ight. All the o e i po ta t it is fo CIOs to ide f su h gaps a d de elop a solid pla fo de elopi g o a ui i g a e pe se fou d issi g. Real-life Experience Archaic New Enterprise Resource Planning o e fi e ea s a k, a la ge ul a o al de ided to aise its Japa ese ope a o s p o ess effi ie i t odu i g E P. Fatall, the p oje t as d i e IT, ot usi ess, ith the la e taki g the posi o of a usto e passi el ai g fo a solu o. IT did t da e tou hi g a usi ess p o esses a d ought to life a s ste that e asi el e eloped e is g p o esses ith a addi o al la e of E P elated o kflo s. With this s ste i pla e, usi ess u its o ued to do thei o k e a tl as efo e ith the o l diffe e e that o the o asio all had to fill addi o al pape fo s ith E P- elated data. These fo s the e e fo a ded to a pu hi g u it ithi the o pa that opied the fo s i to the E P s ste. As a di e t o se ue e of this athe a hai app oa h, the E P s ste suffe ed f o data i a u a ies due to se e e e lags a d data i o siste ies due to p o le s as u da e as illegi le ha d i g. Both issues do g aded this E P s ste to othi g o e tha a plai a ou g tool i stead of the o igi all desi ed effe e a d elia le a age e t solu o. The usi ess ase that i i all jus fied this p oje t lea l has ot ealized at all.

www.ginkgo.com V. PRECARIOUS VENDOR DEPENDENCY Perpetual Ve dor Rela o s. Alo g ith a lea o e all IT st ateg, a Japa ese o po a o s la k a st i ge t IT e do st ateg. A d those that ha e a e do st ateg i pla e o e fail to i ple e t it effe el. This, o i ed ith the Japa ese te de to uild ela o ships a efull a d to t ust i the, o e esta lished, al ost u o di o all, leads to the so e hat iza e ut idesp ead p a e of e e i g e do o t a ts al ost e ha i all, i.e., ithout p ope e-e alua o of oth a tual eeds a d a aila le sou i g op o s at the e of o t a t e e al. As a esult, a o pa ies u k o i gl ai tai o t a tual ela o ships that lo g ha e eased to p o ide the ith o pelli g usi ess e efits. No Ve dor Ma age e t. As a othe o se ue e of the t ust e do s e jo o e a ela o ship has ee esta lished, Japa ese IT a age s feel o u ge to a el a age thei e do s. Neithe do the thi k it e efi ial to o ito the ualit of p o ided se i es, o do the see a eed to a el o t ol thei e do s pe fo a e. I fa t, a Japa ese IT o ga iza o s ould ot e e e a le to do so as all too o e outsou i g i i a es esult i the o plete t a sfe of all ele a t k o ledge a o o ut u ial istake that i Japa is o l egi i g to e a k o ledged as su h. U fa iliarit ith Foreig ers. La guage a d ultu e- elated a ie s as ell as a e tai dist ust of e e thi g o -Japa ese e de the esta lish e t of ela o ships to i te a o al IT e do s a pa ula l tough e pe ie e fo Japa ese a age s. A si ple fa t that adds to the la e s hesita agai st ha gi g supplie s o e d a i all. No Weste o pa a ts to fi d itself at the e of its e do s. No Japa ese o pa, eithe. The e is a diffe e e, ho e e, i he a o pa feels itself depe de t. As lo g as a e do is o side ed a t ust- o th pa t e, Japa ese a age s see o isk a p a e that has p o e effi ie t a o g Japa ese usi esses. But si e IT e do s e o e i easi gl i te a o al, Japa ese CIOs see ell ad ised to adopt so e of the Weste dist ust a d egi to s ste a all a age thei supplie s.

www.ginkgo.com VI. SHAKY PROJECT MANAGEMENT No Stri ge t Methodolog. As e o ed efo e, pe so al ela o ships ou t a g eat deal i Japa. A o di gl, Japa ese p oje t a age e t fo uses o stakeholde a age e t o e tha o a othe aspe t, e.g., p oje t pla i g o p og ess o ito i g. I fa t, fe Japa ese p oje t a age s follo a fo al f a e o k at all, hi h is efle ted a ela el lo u e of e fied p oje t a age e t p ofessio als. I o se ue e, p oje ts i Japa ot o l take lo ge a d i u highe ost tha i ou t ies he e p oje t a age e t sta da ds a e follo ed, ut also suffe f o i a u ate e a d ost es a o s the e es a o s top a age e t ases its go/ o-go de isio s o. U o stru e A tude to Failure. Failu e is a p e ious sou e of i sight, a d o pa ies all o e the o ld seek to i teg ate lea i g f o failu e deepl i to thei o po ate ultu e. Yet, i Japa failu e s ll i e ita l leads to loss of fa e. A o di gl, p oje t a age s ha ituall pla do all ki ds of p o le s a d keep status lights g ee u l atast ophe a ot e de ied a lo ge. Fa i g failu e, espo si le a age s te d to eso t to pe so al easu es as d as as esig a o, hi h effe el dep i es o pa ies of the oppo tu it to lea f o its a age s i sights as to the easo s fo the u fo tu ate esults. O sessio ith Perfe o. Japa ese o sessio ith pe fe o, i pa t a i uta le to afo e e o ed o edie e to usto e e uests, o o l leads to the athe i effe e p a e of assig i g al ost all e uests highest p io it, hi h o es lose to ot p io i zi g at all. This p a e as e e p oje t a age e t p ofessio al ould ag ee poses t e e dous isks to p oje ts i te s of the a u a of udget a d e p oje o s. E e ith p ope, i.e., st i ge t a d ethodologi al, p oje t a age e t i pla e, a IT p oje ts fail. All the o e CIOs a e ad ised to e su e that thei o ga iza o s ot o l appl e og ized p oje t a age e t ethodologies a d est p a es, ut also ake a poi t of lea i g f o ea h a d e e failu e.

www.ginkgo.com How CIOs Can Close the Efficiency Gap Despite p ese ted sho t o i gs, Japa ust e see as a ou t ith sig ifi a t pote al fo e elle e i o po ate IT, ost of all e ause of the u pa alleled se se of dut, lo alt, a d ualit - o s ious ess al ost i a ia l displa ed all Japa ese staff. I the follo i g, Gi kgo has o piled a list of p a al a o ite s that ai at helpi g CIOs apitalize this pote al a d g aduall t a sfo thei depa t e ts i to state-of-the-a t IT o ga iza o s. Lead, do t o p o ise. Esta lish 1 fi IT go e a e a d de ise a effe e IT st ateg alig ed ith usi ess ta gets. De elop a lea oad ap. I stall a a dato p oje t a age e t 6 sta da d ased o e og ized fo al f a e o ks. T ai o hi e e fied p oje t a age e t p ofessio als. Adopt E te p ise A hite tu e 2 o epts hi e if e essa. Pla fo the st ategi all sou d o e sio of the u e t o po ate IT e i o e t. De elop a e do st ateg. edu e 7 e do depe de egai i g the i house o pete e ui ed fo effe e e do a age e t. Fo alize a d do u e t all usi ess 3 p o esses i a u ifo a e a d ide f i te fa es ith o po ate IT. Use as asis fo all op iza o s. Do ot a ept Japa ese pe ial ess. 8 Mo ate all IT staff to stud E glish. Hi e tea he s a d ake E glish skills a o e e ui e e t fo all staff. Be o e a p oa e ad iso to the 4 usi ess. Push a k, if e essa. egula l dis uss the alig e t of usi ess a d IT, e aluate e oppo tu i es. E fo e o ga iza o al lea i g. 5 otate IT staff egula l, i e ize the stud of e IT o epts, a d ul ate a o st u e a tude to failu e. I fa t, a of these a o ite s a e, at least to so e deg ee, i te li ked a d, thus, ought to e a a ked si ulta eousl. The o e all effo t, ho e e, although e tai l sizea le, a e e pe ted to e out eighed the e efits a es o e.

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