Issues to Be Addressed

① Revenue smoothing

Due to the timing of client companies' budget execution and the construction period of the development system, the Group's profit structure tends to concentrate the completion of the provision of services and the recording of sales at the end of the full fiscal year (the end of March).
Currently, as a result of the promotion of stock-type businesses, the seasonality in which net sales are weighted toward a specific period is diminishing. However, we still recognize a situation in which sales in March, when customers' financial results are concentrated, are higher than in other months.
In order to smooth out cash flow and prevent the timing lag, in which sales are delayed from the next fiscal year due to the concentration of engineers' work and unforeseen circumstances, etc., it is an issue to smooth out orders.
The following 4 points are cited as countermeasures.

a. Increase orders for projects in which orders are finalized in the previous fiscal year and sales are recorded in the following fiscal year.
b. Constantly accept orders throughout the year based on stable, long-term business with specific customers.
c. Recording a stable revenue through the increase the ratio of stock-type businesses by receiving orders for continuous maintenance services and cloud services.
d. Proactively launch new services (pay-as-you-go cloud services, etc.) to build a sustainable and stable business model.

② Securing Human Resources

Our Group aims to expand our high-value-added stock-type business, which is not a typical labor-intensive business in the IT services industry, but for further growth, it is essential to recruit and train talented personnel.
As IT penetrates all industries, competition for IT personnel is becoming increasingly fierce not only among companies in the same industry, but also among other industries and venture companies.
In order to expand our business in the future, securing human resources will become a lifeline, and we will need to continuously recruit talented employees.
Regarding regular recruitment of new graduates, we will hire personnel with high potential, and in mid-career recruitment, we will hire a wide range of experienced personnel who can be used as immediate capabilities.

③ Improve productivity (reduce costs, improve quality, and comply with delivery deadlines)

We will not rely solely on the quantitative expansion of our human resources. In order to expand new businesses and improve profitability at the same time, we will continue to strive to improve development efficiency (reduce costs), improve service quality, and comply with delivery times, mainly through the PMOs (Project Management Office) Office.
In developing systems, we will also promote offshore development (outsourcing development operations overseas) and near-shore development (outsourcing development operations to domestic remote areas).

④ Prompt response to changes in the market environment (needs)

Recognizing that the world is undergoing irreversible change, our business also needs to respond swiftly to the constantly changing market environment (needs).
In our business domains, with the spread of open source and the trend toward cloud computing, software development is becoming increasingly in-house, and the era in which IT can only be handled by companies with high technical expertise is coming to an end.
Our group's responses include the following 6 points.

a. We will strategically shift the technology resources that we have developed so far for contract development for specific customers to the direction of "developing our own proprietary services" and "enhancing our own added value."
b. Accelerate business development of proprietary cloud services, which are best practices targeting specific markets and specific operations.
c. Using big data analysis, BI(Business Intelligence), AI(artificial intelligence), etc., we will consider the utilization of data obtained through cloud services.
d. Aware of open innovation, we will actively consider business alliances and M&A for external companies, including venture companies, universities, other industries, companies in the same industry, and businesses that can complement the businesses of our group, as measures to immediately expand our market share and expand our business in product sales and service development.
e. Amid the trend toward the conversion of cyber security technology to cloud services, we will accelerate and advance the adoption of integrated security monitoring services and other services in order to increase our unique added value.
f. Recognizing that data will create value and that businesses will converge on B2C and C2C, we will consider the development of consumer-oriented businesses in our specialty areas.

⑤ Cultivating foreign markets

In the domestic information services industry, cloud services are becoming more popular, and as IT investment begins to show the shade of each field, we will need to expand our business from a more global perspective.
We will develop our business of exporting products and services developed in-house to overseas markets, particularly in emerging Asian countries, which are continuing to grow.

⑥ Responding to Changes in the Making of Society

With the spread of the COVID-19 infections, the use of telework has rapidly changed people's work styles. Various initiatives have rapidly spread toward a new society that utilizes digital technologies, such as online diagnostics at medical institutions using IT technologies, online classes at educational sites, and the use of cloud services.
For this reason, we anticipate that the foundations of society's lifestyles and businesses will shift even more online in the future, and we recognize that this trend is irreversible.
In response to these changes in the social structure, we recognize the importance of responding to security risks, such as enhancing protection against cyber-attacks. We also recognize that the use of cloud services will accelerate, providing opportunities for positive changes in the business environment and business expansion in the business domains in which we excel.
We will pursue our business strategy based on the recognition that the structure of the world after the calming down a spread of the COVID-19 is significantly different from the current.