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The Acceleration of Digital Transformation
– NEC goals for a sustainable future –

September 26, 2017

The digitalization of our society as a whole, or what we call our digital transformation, is advancing at a steady pace. The Internet of Things (IoT) is linking all manner of products and businesses, while Artificial Intelligence (AI) is undertaking Big Data analysis to bringing new value to industry and lifestyles, resulting in improved convenience for us all. ICT companies are the driving force behind this transformation. President and CEO of NEC Corporation, Mr. Takashi Niino, talks here about the present state of digital transformation, and the role NEC can play in this movement.

Data utilization holds the key to digital transformation

──How do you view the ongoing digital transformation we are experiencing at the moment?

Takashi Niino
President and CEO(Representative Director) NEC Corporation

I think the wave of digitalization we are experiencing will have such a massive impact that it will change our very industrial structure by simultaneously creating new business opportunities for companies and making our lives and communities more convenient. There is much talk of this change being atrend towards "digital transformation", but at NEC we see it as more than just a trend. We prefer to refer to it as a "digital industrial revolution" as it will have such an impact that it will change the structure of our industries. Also if AI and IoT are set to change our world and create new value, what kind of society will emerge and what kind of society will we need? I believe one of the keywords here will be "sustainability".

Take for example, the worsening problem of food shortages as the world's population increases. However, many of us are also guilty of wastefully discarding large volumes of food. How do we best rectify this imbalance? Technology, including ICT, can make the difference. Food is produced, processed, packaged, transported and sold. If we can link this continuous supply chain using systems like IoT we will be able to match supply with demand to prevent food loss. It may also improve distribution efficiency levels. The creation of such systems will lead to a more sustainable society. That's my belief.

Of course it is not just about food provisions. If we can create systems that link the supply chains that run from factories and other production sites to consumers, we can bring new value to our society. I think that this is where digital transformation holds great potential.

In 2014 NEC established its "Seven Themes for Social Value Creation" with the aim of working with our customers to create social value in such areas as "sustainable earth", "safer cities and public services", "industry eco-systems" and "work styles". These themes are being addressed through our Solutions for Society business. This trend is evident even at a global scale. In 2015 the United Nations established 17 Sustainable Development Goals (to be achieved by 2030) to solve worldwide social issues. Digital transformation will be indispensable to solving such issues and achieving sustainability, and I believe that there are so many areas in which ICT can contribute to these efforts.

──As our society undergoes wholesale changes, would you please outline the concrete initiatives NEC is leading with to address these changes?

The key to digital transformation is data. It is important that we collect and analyze as much trustworthy quality data as possible, and convert this into new value. However, there is a limit to how much individual companies can achieve. Collating the volume of widely dispersed data created daily requires established social systems, and it is important that the concept of data being a "social asset" is fostered across our communities. NEC intends to lead the way in creating this social movement, and in April we set up a new Data Distribution Strategy Office. We are looking to examine next-generation data usage from a holistic standpoint, including legal framework, ethics and consumer awareness, and make recommendations to communities while engaging in active collaboration with outside experts.

Another important initiative we are undertaking is the Manufacturing (Monotsukuri) Co-creation Program that makes use of ICT to achieve production innovation and supply chain reform. This program consists of four main concepts. These are "craftsmanship" whereby specialist staff members from NEC facilitate supply chain reforms, "connection" to promote integrated reforms that connect IT with operational process innovation, "leverage" to make use of the monotsukuri assets of the NEC Group to put reforms into practice, and "collaboration" to provide places for people to think and work together to create value. At present we are working with over 1,000 manufacturers and other customers to advance this program and create new production systems and solutions.

NEC's desire to develop face recognition technology into social infrastructure

──What kind of strengths will NEC display as digital transformation progresses?

NEC is using its advanced AI suite of technologies called "NEC the WISE" to visualize large volumes of real-world information, and through analysis and prescription, provide new value to our customers.

Each of these value creation processes feature No.1 / only 1 technologies and provide offerings matched to customer issues and/or needs, to ensure that value goes hand-in-hand with reliable and integrated ICT platforms (computing, networking, security).

NEC strength is best demonstrated by our face recognition solutions combining AI with sensor and video analytics technologies. These solutions identify individuals by automatically comparing images captured on camera with pre-registered facial photographs. For three consecutive times NEC has been ranked no.1 in benchmark tests for still image facial recognition by the US-based National Institute of Standards and Technology, which conducts objective evaluations of IT and nano-science technologies. In March NEC again achieved a no.1 ranking, this time in face in video evaluations, with a matching accuracy of 99.2% that significantly bettered our rivals.

In the future, this video face recognition technology is sure to demonstrate its capabilities in the area of public safety, such as entry-exit control for large-scale sports events, detection of suspicious individuals and crime prevention. As we continue to build on our success we would like to see this technology become part of the social infrastructure.

Digital transformation as a social movement

──What are the challenges posed by digital transformation at the moment?

At present we see a situation where various companies are advancing digital transformation initiatives on an individual basis. I feel we need to channel these initiatives into one larger movement.

In October 2016 we entered into a comprehensive business tie-up with GE Digital, a subsidiary of General Electric Corporation. Through this collaboration we hope to develop and deliver total IoT solutions by combining NEC's system architecture and operations knowhow and advanced AI and IoT technologies, with GE's Predix for the Industrial Internet Platform. By ramping up these sorts of activities everywhere to drive co-creation, I think we can turn digital transformation into a society-wide movement.

Of course co-creation can take many different forms. Collaborations, like the one NEC and GE Digital are undertaking, are oriented towards incorporating various technologies onto existing platforms, whilst there is also the option to create your own platform and get a large number of companies and organizations involved. If we look to co-creating solutions that are useful to medical, local government and other specialized fields, this may also lead us in the direction of creating more general-purpose solutions that can be applied in a broader social context.

──Japan has long held an advantage because of its monotsukuri innovations, but as we head into the future and digital transformation progresses on the back of AI and IoT technologies, in what fields can Japan make a contribution to the world?

I think there are all manner of possibilities. One of NEC's strengths, for example, is cyber security technology. Generally speaking, Japan's ICT companies possess some of the highest quality security technology even by international standards. To further our global presence in the future, I think we need to show off not just our technologies, but demonstrate our capabilities in creating environments that encompass expert knowledge in these technologies and our AI applications.

Security needs are only going to increase in the future as the world adopts more IoT technologies. If this happens, Japan's ICT capabilities are likely to take a greater role on the world stage.

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