Undergoing transformation, Fujitsu to focus on tech solutions, connected services

November 8, 2018
Japanese vendor has announced drastic structural reforms to improve profit margins

Fujitsu, which is targeting revenues of ¥3.5 trillion (Dh113.71 billion) by fiscal year 2022, is undergoing a huge restructuring while shifting its core focus to technology and connected services.

“As a service-oriented company, our focus is on technology solutions. Moving in this direction, we are targeting a consolidated operating profit margin of over 10 per cent for technology solutions by 2022,” said Fujitsu president Tatsuya Tanaka.

“The nature of IT investments is changing … and our global product development is now based on a unified strategy. We are working to ensure rapid delivery of services that meet market needs and to acquire globally competitive talent,” said Mr Tanaka.

By 2022, Fujitsu – which is implementing various measures to win global consumers’ confidence - expects nearly 32 per cent of its overall revenues to be generated outside Japan.

“We are growing our multi-cloud business by teaming with mega cloud partners [such as Oracle and AWS] and strengthening our governance structure to ensure globally uniform service delivery. This will help us to grow worldwide, beyond the boundaries of Japan,” said Mr Tanaka.

Fujitsu has announced drastic structural reforms to improve profit margins – one being the closure of its Augsburg site in Germany.

It is also cutting the number of executives by half and business groups will be consolidated as a 'technology solutions' segment. In order to speed up decision making and execution, Fujitsu will implement a two-person representative director structure - namely, the president and CFO (assistant to the president) from January 1, 2019.

“All our indirect costs will be reduced to achieve cost competitiveness and we will concentrate on management resources in the countries where we have strong customer base,” said Mr Tanaka.

“We will be much more efficient if we offer consolidated manufacturing services from only one area - that is Japan.”

Last week, Fujitsu announced it was shutting the Augsburg facility, affecting around 1,800 workers, by September 2020 to centralise all of its manufacturing, sourcing and research and development in Japan.

Tokyo-headquartered Fujitsu’s revenues for the first half ending September 30, 2018 declined more than 4 per cent to ¥1834.5bn. For the second quarter ending September 30, Fujitsu said revenue declined 22 per cent at Ubiquitous Solutions, its PC and smartphone unit, to $1.1bn.

Fujitsu, which invests 5 per cent of its annual turnover in research and development (R&D), is focusing more on fostering new alliances in the coming years.

“Carrying out investment and doing research alone is no longer going to be sufficient, therefore we are actively seeking alliances with different entities such as start-ups and universities, to ensure we have innovative products,” said Mr Tanaka, adding, “Our focus is on providing services that are tailored as per the needs of particular countries or regions.

“In the past, you launch a product in the market, once R&D is completed but this formula is no longer valid,” added Mr Tanaka.

“We have to launch the product in the market even while we are in the mid-way of an R&D cycle. Depending on the feedback of customers, we need to improve or change the product while we are still in the mid-way of R&D. In other words, we have co-create and carry out the research with customers.”

In Europe, Fujitsu has nearly 5,000 employees in Germany and 300 more in Austria and Switzerland.

The announcement of the closure of Augsburg facility came nearly a year after Fujitsu sold off a 51 per cent stake of its PC business to China-based Lenovo for nearly $269 million.

In the Middle East, Fujitsu considers the UAE, Saudi Arabia and Turkey its top-performing markets, however, the company does not disclose the regional earnings.

Fujitsu has also set its sights on latest 5G technology. Last week, it agreed with Ericsson to deliver end-to-end 5G network solutions and related services.

“We are developing 5G radio access network products for Japan market and also aim to deploy 5G radio access network products to global market.”

thenational