Japanese Firms Polarized On Positive, Negative Effects of IT Investment
nikkeibp.asiabiztech.com
August 10, 1998 (TOKYO) -- Japan's corporate community is suffering the effects of a
worsening economy and problems in the financial system are hurting business prospects,
and amid such an environment, companies are displaying different stances toward
investments in information technology.
Some companies are reducing their IT investments, but many are increasing their
investments in information technology. Thus, a few varying trends are seen in corporate IT
investment, according to Nikkei Computer's second survey on the "Status of Information
Systems Utilization." Nikkei Computer conducted the survey among Japanese companies
from late April through May.
This year's survey targeted information system sections of 7,497 listed companies and
over-the-counter companies. A survey form was sent to them in early May, and 2,061
valid responses were received by May 27, resulting in a response ratio of 27.5 percent.
The largest number of responses came from the manufacturing industry, accounting for
33.0 percent, followed by the construction industry (23.0 percent) and the distribution
industry (16.0 percent).
Corporate IT Strategy Being Polarized
Two trends are observed in corporate IT strategies in fiscal 1998 (April 1998 through
March 1999) (See chart).
Companies "not intending to increase their investments" accounted for 48.5 percent, up
about 15 percentage points from fiscal 1997. Companies giving the response of
"investment amount on the same level as the previous year" accounted for 29.5 percent,
up 8.2 percentage points year on year. And companies that said they would "reduce
investments" accounted for 19.0 percent, up 5.9 percentage points.
A total of 51.5 percent of the companies said they would "increase investments." This
compares with 62.6 percent in fiscal 1996 and 65.6 percent in fiscal 1997. This year's
figure showed a decline of more than 10 percentage points. The positive mood for IT
investment, characterized by promotion of end-user computing and migration to open
systems, appears to have leveled off.
Nevertheless, not all companies are reducing their investments. About 31.6 percent of the
companies responded that they intended to "increase investment by more than 20
percent." This is much higher than the level of 23.4 percent a year earlier.
The survey indicates that the companies that plan to increase their IT investments this year seek to make large investments.
Broader User Base For Intranets
According to this year's survey, implementation of corporate intranets increased by 10
percentage points from the previous survey. Intranets began to be popular in 1995, and
they are now employed by 25.6 percent of the companies.
As for the implementation rate classified by company size, nearly 60 percent of large-scale
companies with more than 5,000 employees have implemented intranets. Midsize
companies with fewer than 500 employees have an implementation rate of over 15
percent.
About 30.7 percent of the companies plan to implement intranets, and this figure exceeds
the groupware installation rate of 21.1 percent.
Year 2000 Problem Takes Time For Completion
The clock is ticking on the Year 2000 problem. The previous survey disclosed that the
problem had been tackled by 47.6 percent of the companies. In contrast, this year's
survey showed that 82.1 percent of the companies are working on necessary
countermeasures. About 60 percent said that they had already done more than half of the
necessary work.
It should be noted that the companies that "have completed their countermeasures" are still
small in number. In last year's survey, 14.4 percent responded that they had completed
their Year 2000 work. This year, 20.2 percent gave the response: "The countermeasures
have almost been completed including a connection test with partners outside the
company."
Many companies apparently are behind schedule. Just under 20 percent of the companies
responded that they would start solving the problem, or establish the necessary plans.
20 Percent Outsource Host System Operations
From 1997, outsourcing became popular in Japan. Some large companies including banks
discontinued use of their mainframes and switched the information processing operations
to outside vendors. In some cases, even EDP is being outsourced.
Japanese companies had formerly been managed under a policy of internal system
development and internal operations. But those days are virtually over.
This year's survey showed that nearly 60 percent of the companies had already hired
outside resource vendors to handle their system development and operations. A total of
42.4 percent outsource a portion of their operations, and 16.3 percent outsource all of
their system development.
For outsourcing of system operations, just under 20 percent of the companies responded
that they would entrust all operations involving host systems including mainframes and
office computers to outside experts.
For systems using client-server systems fewer than 10 percent of companies are fully
outsourcing those systems and the same percent prevails for Web-based systems.
However, more than 10 percent of the companies responded that they have plans to
entrust such systems to outside vendors.
Detailed survey results are published in the July 20 issue of Nikkei Computer (in
Japanese).
(return to news)
(Nikkei Computer)
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