Let Us Always Be An Innovator
(Translation of the President's message welcoming
the year 2001.)
I wish all of you A Happy New Year!
I trust each of you welcomed the new Century with his or her own thoughts renewed. The last year ISID observed a significant mile stone as its stock was listed on the First Section of the Tokyo Stock Exchange in the twenty-fifth anniversary of its founding. Thus, today we are starting the first full year with a newly acquired status of a public company. It is my renewed determination that we will together execute management that places particular emphasis on the efficiency of the capital, which would generate returns surpassing the expectation of the shareholders, making best use of the capital which our shareholders entrusted to us.
Mr. Otake, the founding President of the Company, once stated: " ISID was established as the first commercial remote-computing service company in Japan, foreseeing the frontiers role to be played by information/telecommunications service in the coming high growth economy. Ever since its founding the Company tackled with challenges in the frontier of the service which demanded much market education and development. In the process, the Company experienced probing in the dark, trial and errors, gaps between ideals and realities, and was finally able to establish the foundation of our business today. The underlying spirit of the Company during that phase is the frontiersman-like guts and the pioneering spirit, prepared to bear the burden of market education." Looking back the twenty-five years of our business development, there are many, many firsts in our industry. Starting with the first in 'commercial TSS in Japan,' the following is a partial list of those firsts:'remote computing service in a global scale,' 'development of global application systems,' 'pioneering into the CAE area,' 'systems integration service,' 'application of IT to the development and engineering processes innovation with 3-D CAD as a starter,' and 'expanding the scope of business to EC arena,' etc. We can confirm that our posture of challenging frontiers as an innovator is indeed what makes ISID unique. That is the precise reason for our Company vision "IT Solution Innovator."
Turning our eyes on Japan's business climate, the economy still remains in a condition which is far from complete recovery from the recession. Though the Bank of Japan "tankan-survey" last December confirmed the continuation of slow recovery, the diffusion index of business sentiment among major business and manufacturers stayed flat, suggesting the uncertain characteristics of the future economy. However, the information service industry where ISID belongs to is enjoying a strong trend, especially in application systems development service and systems operation service. This trend is confirmed by average financial figures for the current fiscal year among 35 listed companies in the industry which are 12% increase in sales and 27% increase in ordinary profit over last year. Now that the active utilization of IT has become an important part of national strategy, our information service industry bears a significant responsibility as the leading industry and at the same time faces a great opportunity for growth. Securely capturing that opportunity means the fulfillment of that responsibility. In order to take full advantage of the opportunity, we need to further increase our strength as a company, and IPO is merely a means to do so. With newly acquired status as a public company and fund raised by the IPO, we must transform ourselves into a company with management characteristics that would assure increased profit and sustained growth. We must achieve sales and profit growth rates that surpass the industry average.
Now I would like to talk about our particular emphasis on the Internet business related area as our growth strategy. As the digital economy proliferates, many Japanese companies are preparing to go into e-business. In its beginning years, e-business was often regarded by many as an experiment by emerging companies. Even when established business with long tradition entered into it, it was in different business area remote from their core business, and in experimental mode. With reasonable success in that early stage, established business is now entering into a phase where they turn their core business and existing business processes into e-business by the use of the Internet and its related technologies. Often called 'from e(emerging business) to E(Established business), ' this movement is expected to accelerate and represent enormous opportunity for us. Mr. Jack Welch, GE's Chairman and the CEO, remarked last fall when he came to Japan to the effect that big business has abundant management resources such as brand power and excellent products: they can become winners in the Internet world by simply turning the way they do business into digital. Supporting E-business requires capability to offer in an integrated manner strategy such as structuring new business models, marketing that will build new relations with customers, and system technology that will realize the strategy and the marketing. Know-how to integrate advanced IT into existing systems which established business has developed in the past is also required. I believe that ISID do have those capability and know-how, and it has an impressive record of actually building many application systems by taking the full advantage of them. We will increase our efforts to support E-business with the incomparable competence as our leverage.
Another key element of our growth strategy is the emphasis on the ISID group management. As you well know, offering 'total solution' is ISID's business philosophy. In a radically changing business environment, the clients' needs are becoming more advanced, complex, and large in their scope, which in turn require diversified technologies and know-how. As it is not practical for ISID to do every thing by itself, alliance with other companies becomes a necessity. Using the fund raised by the IPO, we will actively pursue, in Japan and globally, opportunities for alliance with specialized companies, which would require capital investment. Included in the candidates for the alliance would be consulting companies strong in business models and securities technology, reliable systems integrators, hardware sales companies, companies strong in building information infrastructure such as LAN. By this alliance, we intend to expand our capabilities as a business group. We will structure the group so that the truly total solution, encompassing from consulting to system design, development, and maintenance, may be readily offered in focused application areas. In each of those focused application areas, we aim at becoming Japan's top class, not only in the quality of technology and service, but also in sales and profit figures.
We will invest in the development of new products and services. By the leverage of ISID's industry and business knowledge coupled with system development technology and know-how, we intend to develop new software products which can become best-sellers such as GBS, SCOPE, RTGS, etc. Internally developed products and services are usually of high margin and a great source of profit.
Steps will be taken to enhance the quality of each and all of you who are the most important asset of ISID. Training program will be structurally strengthened and a scheme will be prepared so that an individual may challenge the development of his or her capacity based on one's professional goal. Regarding the personnel administration system, which is the basis for optimum contribution of our employees to the Company business, we will modify the current system to have more emphasis on the merit-based evaluation, together with the introduction of some incentive plans. We will review and modify if needed the retirement payment and pension plan. The whole idea is to get rid of evil-equality and enhance the level of consent on the part of each employee. Study for those steps is now underway and implementation will be done in a speedy and timely manner.
After the IPO, ISID is getting increased public attention. As a company listed on the First Section of the TSE, we are looked at with keener eyes than before. At the corporate level, we will strive to establish business ethics, promote best disclosure to our shareholders, strengthen our accountability, and establish our corporate governance, a basis for sound and vigorous corporate management. Realizing greatly increased responsibility to our shareholders, we will execute our management to enhance the level of satisfaction by the stakeholders who are our shareholders, suppliers, clients, and employees. As I have repeatedly mentioned in the recent past, I expect each and every one of you that your action and words will be worthy of a member of a fine organization that is ISID.
To be always an innovator means continued efforts with aspiration and challenging spirit. It is living up to "ISID, Forever New." Let us together explore into the future remembering our goal to become a world class company which is globally respected. Best wishes for your good health and continued good work for yet another challenging year.
