Digitization is the key point!

Digitization is the key point!

Digitization is the key to a company's survival. Companies that are the first to digitize will be able to reduce costs and become more competitive. Digitization is indispensable for small and medium-sized enterprises.

Background of digitalization and now
Grasp the trends of digitalization (Japan)

Demand for digital-related services is expanding rapidly due to the spread of the new coronavirus infection. Nowadays, a digital shift in corporate activities is inevitable. In this report, we will report on the rapidly developing global digital business and the efforts of Japanese companies in a two-part series.

Technological development behind digitalization
Behind the progress of digitalization in recent years is the rapid development of technology. First, the dramatic evolution of artificial intelligence (AI) research (see Figure 1). AI research, which has been carried out for half a century, has reached its third wave since around 2000. From around this time, machine learning and deep learning became possible. The use of big data has become a reality as AI itself has acquired knowledge and has become able to quantitatively express the characteristics that define that knowledge.

In addition, 2019 was the year when the 5th generation (5G) of mobile communication systems was introduced, the so-called first year of 5G. With 5G, "ultra-high speed," "ultra-low latency," and "multiple simultaneous connections" are realized, and data processing becomes much faster. According to the announcement by GSMA, an industry group related to mobile communications, 5G was introduced in 24 markets (as of January 2020), and commercial operation began nationwide in April 2020 in Japan. In addition, computers have made great strides. The supercomputer "Tomitake" developed by RIKEN has become a hot topic as a computational resource for research and countermeasures for the new corona virus, but in recent years, a "quantum computer" that performs calculations using the principles of quantum mechanics has also been developed. move on. In 2020, IBM's Q System One, which is conducting research on quantum algorithms, will be introduced at the University of Tokyo (493.07KB). There are also plans to widely provide skills and expertise for technological development in Japan to large companies and start-ups.

Figure 1: Advances in major digital technologies

Source: Created from various materials

First tide: from virtual to real
The rapid progress and spread of these technologies have a great impact on corporate activities. The first trend of digitalization seen in recent years is that online platformers have advanced from virtual space to real space (see Table 1). Until now, these companies have strengthened their influence by converting search data, purchase history through electronic commerce (EC), and information on SNS into data. In recent years, these platformers have begun to expand into various industries in the real world. Alphabet, the operating company of Google, is developing smart glasses equipped with VR (virtual reality) functions for the manufacturing industry and is building a power generation system for renewable energy. Amazon has entered the mobility industry, including installing AI speakers in self-driving cars. In many cases, platformers are expanding into other industries more quickly through alliances and acquisitions with other companies.

Table 1: Online platformers advance into the real world
Company name virtual reality
Alphabet
(Google)    
Search engine
Video distribution (YouTube)
Sale of PC "Chromebook"
Started self-driving taxi service in collaboration with Waymo
Development of health management app
Construction of renewable energy power generation system
Development of VR for manufacturing industry, etc.
Amazon
EC
Video distribution (Amazon Prime)
Real store "Amazon Go" development
Sale of AI speakers "Amazon Echo" and "Alexa"
Entry into broadband communication services using artificial satellites
Providing development support services for autonomous driving, etc.
Baidu
Search engine
Opening of autonomous driving platform Implementation of "Apollo program"
Mass production and test operation of unmanned minibuses with bus makers
Alibaba
EC (Tmall)
Mobile payment (Alipay)
Fusion of net and real by fresh supermarket "Roma fresh"
Optimal coordination proposal at "Fashion AI Concept Store"
Mitigating traffic congestion in the city using AI and big data analysis, etc.
Rakuten
EC
Rakuten Medical, Insurance, Financial Business, etc.
Yahoo
Search engine
Mobile payment (pay pay)
"Data forest concept" that provides data to companies, local governments, etc.
Mobile phone business "Y Mobile" etc.
Source: Created from each company's website

In addition, Chinese e-commerce giant Alibaba has advocated the concept of "new retail" that makes full use of big data and AI, and opened a fresh supermarket "Roma Fresh" that combines online and offline. In addition to regular over-the-counter sales at supermarkets, online shopping, cooking, and delivery are carried out. Baidu, a major search engine, is planning an autonomous driving platform with the support of the government, and has started a test service of autonomous driving level 4 (fully autonomous driving under certain conditions).

Second trend: Expansion of existing business areas through digitalization
The second trend is the expansion of existing business areas through digitalization. Traditional manufacturing and interpersonal service industries add new value or change business models by digitizing and networking customer information and processes. Each industry is expanding into new areas, such as the digitization of all things by IoT (Internet of Things) and sensors, and the progress of services such as sharing and subscription (see Fig. 2).

Figure 2: Expansion of existing business areas through digitalization

Source: Created by JETRO

For example, Daimler AG, a major automobile manufacturer, has developed a parts management system using IC tags for users such as repair workers. We have improved the convenience of users by introducing a mechanism in which inventory is managed by IC tags, and when there is a shortage, orders are placed on smartphones and automatically replenished. Bridgestone, a major tire manufacturer, equips tires with sensors to detect road surface conditions and support safe driving. Toray has developed smart textiles in collaboration with NTT. By embedding a sensor in the towel, it became possible to grasp the daily health condition. Even in entertainment, there is a movement toward digitalization. The US National Football League (NFL) has succeeded in gaining new young fans by developing an app by digitizing player movements (see Table 2). In this way, the movement of companies that provide new value to customers by digitizing and digitizing existing businesses, expanding the market, and expanding the customer base is becoming active worldwide.

Table 2: Examples of companies expanding their business domain through digitalization
Company name Existing business Digitization expansion business
Otsuka Pharmaceutical Drug discovery and drug sales Development of digital drugs in collaboration with US Proteus Digital Health Embedding sensors in tablets,
Record medication and provide information to caregivers
Development and sales of Shiseido skin care products Data conversion of skin quality with IoT Manufacture of beauty essences and emulsions that are optimal for each individual
Development of TORAY fiber
Developed a smart textile that can detect heart rate and electrocardiographic waveform in collaboration with NTT. Started demonstration experiment of heat stroke countermeasure system and drowsiness detection for drivers.
Manufacturing of Michelin tires
Sales IoT monitors tire pressure and temperature When an outlier is recognized, the driver is warned and the risk of operation delay is reduced.
NFL
(US National Football League) Data on the movements of athletes, publicly available An app using open data has been developed, and the number of mobilization of visitors has increased.
Manufacture of Komatsu Construction Machinery
Sales GPS, data conversion of construction site status by drone survey, cloud processing Providing comprehensive consulting services for construction
Bridgestone tire manufacturing
The tires for sale are equipped with sensors to detect the condition of the road surface. The condition of the road surface (dry, wet, snow, etc.) is determined to support safe driving.
Manufacture and sale of Daimler vehicles Digitally remote control enables locking and unlocking of doors Realizing a service for delivering repair parts to craftsmen in the vehicle
Manufacturing and sales of Toyota vehicles By subscribing to vehicles, it is possible to change from ownership to sharing. Conversion to a mobility company that supports diversifying vehicle usage patterns
DHL Transport Audi develops digital key in collaboration with Amazon Launches "inker delivery" service that turns cars into delivery boxes
Note: The list of cases is listed above for those that are more "data-ized" and those that are more "networked" for business expansion.