Fujitsu Services

Source: Exec Digital UK

Date :6/27/2007 7:14:20 AM

How Fujitsu applied the lessons of lean to IT

Fujitsu in Ireland offers a complete range of IT Services and Solutions across multiple industries in both the public and private sectors. It offers dedicated service teams supported by the latest in systems management and support tools, which harness the scale and power of Fujitsu’s huge global footprint. CEO Regina Moran spoke to James Hurley about the challenges of re-branding, a competitive Irish marketplace and the lessons that can be learned from the company’s Eastern roots

Written by James Hurley & Produced by Ben Weaver

Fujitsu is a leading provider of customer-focused IT solutions for the global marketplace. The company specialises in pace-setting technologies, highly reliable computing and communications platforms, and a worldwide body of systems and services experts. Headquartered in Tokyo, Fujitsu Limited has a turnover of 4.7 trillion yen (€37 billion).

Re-branding and merging

Regina Moran has extensive experience in the IT industry. She has spent 21 years with Fujitsu in one form or another, and in August last year she became Chief Executive of Fujitsu in Ireland, so she’s uniquely placed to discuss the exciting and extensive changes the company has seen in recent years. Moran entered the IT industry as a hardware engineer for Amdahl, a computer mainframe manufacturer. From there she moved to DMR Consulting, which became Fujitsu Consulting and subsequently merged with Fujitsu Services in April 2004.

“I was director of operations at DMR consulting, responsible for project delivery,” Moran explains. “We had built up a very strong reputation with our customers. About five years ago, Fujitsu, as a global brand and the third largest IT company in the world, decided to re-brand all of its acquired companies and within Ireland three Fujitsu companies were born; Fujitsu Consulting (formerly DMR Consulting), Fujitsu Technology Services (formerly Amdhal) and Fujitsu Services (formerly ICL) – these were well established brands; for example, ICL had been in Ireland for 40 years and Amdhal for almost 30 years.”

The subsequent merger of these three companies just over three years ago into Fujitsu Services, brought the consulting, system integration and managed service capability from each business together, creating an end-to-end all inclusive solution provider that could add significant value to its customers. “Now we can design, build and operate applications and infrastructure systems. That’s a very powerful capability to have under one roof.”

The move underscored Fujitsu's commitment to provide customers worldwide with locally attuned, end-to-end business solutions and technology expertise, as well as its strategic emphasis on software & services as the principal driver of the group's overall growth. But it hasn’t been a process without its challenges.

“We’ve just come through a successful transition where we’ve merged what were three very strong brands in the Irish Market. Bringing a new brand to market is challenging. One of the challenges was the fact that we didn’t have an instantly recognisable brand like some of the competition.” This resulted in a slow couple of years for Fujitsu in Ireland, but Moran never doubted that the strategy would bear fruit in the long term.

“The interesting thing about being part of a Japanese company is that they take a long term view,” she explains. “Fujitsu first acquired these companies as long as fifteen years ago, yet they purposely moved slowly to bring them all together. This meant the possibility for the eventual merger to be successful was much higher – it’s a slow, methodical approach to getting maximum benefit. We are developing relationships with customers that are gaining significant value for our three primary expert areas – consulting, systems integration and managed services. It was very challenging but last year we began to see the benefits of the merger. It has enabled us to go to market with a strong capability and proposition for our customers.”

Changing opportunities

Fujitsu’s recent successes in Ireland have been broadly based on its ability to exploit changing needs in a marketplace which increasingly demands the kinds of end-to-end solutions that the company is now in a position to offer.

A trend for bespoke development systems over the last few years is being overtaken by systems integration and multi-vendor systems brought together in a cohesive fashion. “There’s a lot of integration software on the market,” says Regina Moran. “Designing and building systems that use best of breed software and hardware components rather than developing systems from scratch is the big change.” Fujitsu is increasingly commissioned to run its clients’ entire systems – what the company calls ‘managed services’. “That’s a term that is used more now rather than outsourcing, which suggests the transfer of employees.”

The company is also enjoying increased demand for its partnership approach, where customers retain the ownership of the system, but Fujitsu runs the system on the customers’ behalf. It’s a very collaborative approach. “We see that happening more and more. For example, we have a number of large contracts with the Department of the Environment, Heritage and Local Government and with The Courts Service where we run components of their IT for them. They get the benefit of lowering their costs and risks, but still remain in total control.

“We had a very strong year last year, we were extremely happy with our performance,” she says. “The deals that we see now include the full breath of our end-to-end portfolio of services . This is the proof that it was a strong strategy. In terms of size, we also tend to be involved on the strategic level with clients. These tend to be what we call ‘tier one’ clients: large in size, with a large IT spend, and a large, complex IT environment. The main growth area that we’ve seen is in financial services, telco and more recently in government.”

Fujitsu is enjoying growth in its target sectors and is benefiting from a buoyant market in Ireland. “IT activity is very high in the Irish market at the moment so it’s a great place to be. The marketing focus for this year will be to increase our brand awareness especially amongst key prospects and clients in the tier one area. We’re not yet an instantly recognisable brand but we are well known in certain customer sectors. We are continuing to push through into the telco and financial services sectors and the areas where we feel we can offer the most.”

When it comes to managed services for the public sector, Moran says that the UK is probably ahead of the game. “Fujitsu Services are extremely successful in the UK and have a large share of the central government sector. The government here in Ireland is moving in that direction but it’s a slightly different model. Here the deals are framework agreements where they are looking for a partnership approach. There hasn’t been as much in terms of transferring civil service employees to private companies. It’s a question of scale. In a geography the size of Ireland it’s easier to have that collaborative approach.”

However, in the private sector it is much more common to see the transfer of employees. Fujitsu in Europe has a lot of experience in employee transfer and there is evidence of this in recent deals with Allianz and Reuters. Both of these deals have seen a large number of employees transfer to Fujitsu.

A highly tuned marketplace

Ireland is a small market compared with the other major European geographies, yet all the key players in the IT industry are active in the Irish marketplace; it’s intensely competitive. “Ireland is probably the most competitive European IT market,” Moran says, “so to gain market share in any real sense, we have to take it from the competition.

“IT services is a highly tuned and highly developed market. Customers are very clear on the value they want to get from IT service provision, so I think in that highly developed market, innovation can make the difference. We have a large R&D spend and a unique perspective. A lot of our competitors rely on Western influences, whereas ours are Eastern. We take an industrialised approach to solving IT problems and there’s a big focus on quality and repeatability. Japanese companies in any sector stand for these things. That’s a real differentiator.”

In an industry where the expectation of value is so high, the market pressures are huge; the Irish market is a hotbed of inflationary pressures and almost full employment. “All of the usual indicators of a strong economy are at the higher end in Ireland. The good side of that are the opportunities in such a buoyant market – people are doing very innovative things. There’s good and bad, but it’s certainly never boring.”

In the event of a downturn in the Irish economy, Moran feels that while Fujitsu may temporarily be forced to implement fewer systems, the core of the business shouldn’t be dramatically affected. “We run key operational or ‘mission critical’ systems. If there was cost cutting amongst clients, this isn’t an area that would be affected. In fact, since it enhances value for businesses, it becomes more important in those times.”

Through the company’s close association with Microsoft - Fujitsu is a ‘gold certified partner’ with Microsoft, the highest level of partnership – it is working towards the comprehensive implementation of an industrialisation initiative. “On a global scale the business environment has changed rapidly over the last couple of years, with increased globalisation and competition,” says Catherine Casey, a Marketing Specialist at Fujitsu. “What we have done with Microsoft is implement this industrialisation initiative where the two companies have made significant investments. The purpose of the industrialisation of IT is to guarantee the repeatability and quality of solutions. We’ll engage with a client and 80 percent of the design work will have been done. That leaves 20 percent to customise for the individual customer. It’s an efficient and exciting way of doing business – emphasising tried and tested solutions that add value to our clients, reduce cost and risk and result in faster implementations.”

We also have a strategic partnership with our sister company Fujitsu Siemens. We have collaborated with Fujitsu Siemens on many important projects and well know names here in Ireland including An Garda Siochana’s Fixed Charge Processing system (penalty points), Aer Lingus, EBS and BTSI.

Fujitsu Siemens, been part owned by Fujitsu Limited is also embracing the concept of the industrialisation of IT. Fujitsu Siemen’s Dynamic Data Centre concept is hugely important in the continuing success both companies have together. The DCC concept tests and optimises infrastructure solutions in a controlled environment delivering real added value and cost savings to our customers. Moran comments “The partnership between our two companies is a major factor in both our future success. Together we can offer customers tired and tested solutions which translate into cost savings, faster implementations and greatly improved performance. This you will agree is a strong proposotion we can offer to our customers.”

Looking east

While it has been fashionable to talk about the implementation of Asian manufacturing techniques into all sectors for some years, the introduction of industrialisation techniques into the mainstream services sector is relatively new and unproven. Kaizen, lean service and Six Sigma are frequently touted as antidotes to inefficiency and inflexibility, but a full scale ‘industrialisation’ model for services extends well beyond these methods. It is, in effect, a fundamental change in culture that requires an eastern rather than western mindset to contemplate and adopt, and Fujitsu is in the perfect position to do just this.

Fujitsu has an ongoing initiative between Tokyo and London where it’s working with Toyota and other companies to research lean initiatives in manufacturing in order to apply those principles to IT services. Manufacturing is a mature and highly repeatable process in the automotive industry. The processes employed in Toyota factories are well documented and replicated in every factory across the world. The company’s manufacturing plants are pre-fabricated in Japan, pre-tested and transported to their destinations for re-assembly and test prior to full scale production. As a result, cars produced in any Toyota plant around the world are as reliable as they would be if they came from the finest plant in Japan.

“It’s exciting to apply principles that were applied years ago in manufacturing to the IT Services environment,” says Regina Moran. “But the investment required to translate these principals into IT Services Management and IT Systems has only recently been made. There are a number of companies, mostly Japanese, investing with us because they are interested in the benefits they can get in their business from this initiative.

This also applies to IT Support and Consulting; it’s a holistic approach, and not one just based around the systems. “It links business consulting to technical people; the link is where the value will be released. There will be very real savings, so it’s an exciting development.”

Asked why this kind of initiative hasn’t been implemented earlier in sectors other than manufacturing, Moran suggests that differences in culture between East and West are at the root. “It’s common sense, but yet it’s not common practice,” she suggests “Lean can be implemented in any sector, but there must be the preparation for analysis of every aspect of the business and the preparation for change, and that requires a paradigm shift. Fujitsu is rooted in a Japanese business philosophy, so that should be an easier translation for us to make.”