The business overview of Systems Design (3766) is as follows.

2. System development business

In the system development business, we provide system integration (SI) that provides planning, development, and total services for enterprise information systems. In addition to fully customized development, we also provide tailor-made solutions using low-code development tools, Salesforce※1, SAP※2, cloud-based development platforms, and other platforms to meet the needs of businesses, as well as infrastructure construction for WEB and information networks, middleware packages compatible with hand terminals and smartphones, and other products and services.

※1 Salesforce: A cloud-based CRM (Customer Relationship Management) platform provided by US-based Salesforce, which provides tools for streamlining sales, marketing, customer service, and other business operations.

※2 SAP: An ERP system (Enterprise Resource Planning) provided by Germany's SAP that integrates and manages various business processes of an enterprise.

The main examples of system development include core systems for automobile manufacturers, electronic medical record systems for medical institutions, system infrastructure for telecom service businesses, and core system for logistics businesses. Major clients include Honda (7267), Fujitsu (6702), Optage Corporation (a subsidiary of Kansai Electric Power (9503)), SG System (a subsidiary of SG Holdings (9143)), and OZ Soken (a subsidiary of Osaka Gas (9532)).

In the domestic ICT market, the aging and legacy-ization of companies' core systems have become a major issue known as the 'cliff of 2025', and the need for system updates is increasing. For this reason, the company is focusing on accepting orders for system replacements that involve open systems and modernization, such as cloud-based systems and DX for new IT technologies.

※Cliff of 2025: A concept proposed in the 2018 DX report by the Ministry of Economy, Trade and Industry. Existing IT systems will become outdated, bulky, complicated, and black-boxed by 2025, which will decrease business flexibility and competitiveness and lead to an IT talent shortage leading to difficulty maintaining and updating systems. Failure to resolve this issue could result in potential economic losses of up to 12 trillion yen annually after 2025.

In particular, we actively expand solution services using low-code development tools. It contributes to increasing production efficiency and optimizing the time and cost of corporate system implementation, as well as improving our own profitability. Many loyal customers have requested the use of low-code development tools to develop their own systems. The company has become an official sales agent for 'Rakuraku Framework3', a low-code development platform from Sumitomo Electric Information Systems, and 'Rakuraku Workflow II', a non-programming workflow system. Starting in November 2022, it will provide an electronic signature linkage service using 'Rakuraku Workflow II', and in July 2023, it will offer service for the infrastructure construction and older version upgrades of 'Rakuraku Framework/Workflow'. The company is committed to expanding these tools into services, the latest technologies, and business applications as DX tools by leveraging existing development platforms, such as Salesforce, SAP, and the cloud, to provide solutions for corporate DX and expand its revenue base. The use of these tools is also an effective means of overcoming the current difficulty in securing system engineers, unlike building systems from scratch by defining requirements. As a countermeasure to secure IT talent, the company plans not only to outsource to domestic partners but also to use overseas partners.

※Low-code development tool: A tool that supports developing applications quickly and flexibly without writing source code as much as possible. With the promotion of corporate DX, the need for developing applications quickly and flexibly has arisen, making it a topic of great interest in recent years.

As a development tool, our subsidiary Shared System has developed middleware package software series "HaiSurf" which is optimized for systems using handheld terminals, business smartphones, and tablets, in addition to "Rundlax" which is specialized for Android devices that achieve significant reduction of processing speed and data volume. We are engaged in sales, maintenance and support for these systems. Shared System has a customer base mainly consisting of powerful companies in the industry, by undertaking the development of logistics/distribution industry-specific systems. "HaiSurf" and "Rundlax" are widely used in warehouse operations where handheld terminals are frequently used and have been introduced by more than 1,000 companies domestically and internationally, with a top-class track record of introduction in the industry. The products have been deployed not only in Japan but also in Southeast Asian countries including Vietnam, Thailand, and Singapore, as well as in various countries around the world such as North America, Germany, and Australia.

Martisoup, with whom we have newly established a capital business partnership, has strengths in map/positioning platform construction, a wide range of location measurement technology, and data analysis of acquired location and business information. They provide a tool called "iField" that aggregates and analyzes on-site information starting from location information. By selling "iField", they increase contact points with companies, expand business areas, and aim to achieve synergy with logistics/distribution systems within the same group.

Furthermore, we have set up a DX promotion office under the direct control of our president, and we are pursuing the exploration of new businesses and the development of advanced IT technologies (such as AI and data science). As the first initiative, we started a joint research program in the healthcare field with the University of Tokyo in March 2023. We have been supporting the introduction of Fujitsu's package software (electronic medical records, medical accounting, etc.) for hospitals since before. In addition, we have transactions with National Health Insurance Association and Medical Association in our outsourcing business, there was groundwork in which IT engineers with knowledge and expertise about healthcare and medical institutions and health-related organizations could be effectively utilized. Therefore, we are taking up the challenge of creating a business in the rapidly growing healthcare field, especially in the health/healthcare area. This time, we will conduct joint research on disease prevention in the healthcare field for three years using AI and statistics, and if the research results show promise, we will have the opportunity to propose to health insurance associations and others. Considering the social issue of contributing to the health of the people in the face of the tight finances of the medical insurance, it is the optimal theme for our company.

(Author: FISCO Guest Analyst Shuji Matsumoto)