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What is Sumitomo Corporation’s "Refine with Digital, Profit with Digital" Goal? We asked CDO and CIO Tatsushi Tatsumi, who is leading the DX strategy.

2024.9.30

Business

What is Sumitomo Corporation’s "Refine with Digital, Profit with Digital" Goal? We asked CDO and CIO Tatsushi Tatsumi, who is leading the DX strategy.

Sumitomo Corporation is committed to digital transformation (DX), a key theme in its management strategy. The company has been steadily developing an internal promotion system, starting with the establishment of the DX Center in 2018, an organization dedicated to promoting DX throughout the Group. Under its new medium-term management plan announced in May 2024, Sumitomo Corporation has entered a new stage with the slogan "Refine with Digital, Profit with Digital." We asked Tatsushi Tatsumi, Chief Digital Officer (CDO) and Chief Information Officer (CIO), about Sumitomo Corporation's goals for digital transformation.

Executive Officer, Head of DX & IT Group, CDO & CIO

Tatsumi Tatsushi

Tatsumi joined Sumitomo Corporation in 1993, where he was involved in the export of telecommunication infrastructure to Southeast Asia. In 2007, he became CEO of Soukai Drug, an e-commerce site for health foods and medicines. In 2014 he was appointed CEO of Presidio Ventures, a Silicon Valley-based CVC (Corporate Venture Capital) firm. From 2020 he was in charge of medium-term management planning, company-wide portfolio strategy, and Sumitomo Corporation’s entrepreneurship program in the Corporate Planning Department. He has been in his current position since April 2023.

Index

Looking Beyond Internal Transformation to the Future of "Refine with Digital, Profit with Digital"
From Management to the Frontline, Company-Wide DX Brings Efficiency and Creativity
Leveraging the Strengths of a Trading Company and our Human Resource to Achieve a Sustainable Society

Looking Beyond Internal Transformation to the Future of "Refine with Digital, Profit with Digital"

Could you provide some insights into Sumitomo Corporation's progress of DX in recent years, leading up to the adoption of the "Refine with Digital, Profit with Digital" slogan in the new medium-term management plan?

In the six years since the DX Center was established in 2018, Sumitomo Corporation's DX has evolved through two phases. During the first three years, we focused on establishing internal structures and building momentum. There were aspects of the business processes that continued to be managed manually, and levels of digital literacy were not particularly high at that time. We therefore began by educating our employees to understand the importance of DX.

Over the next three years, each SBU (Strategic Business Unit) made the shift to integrating the use of digital technology into their business strategies and to taking concrete actions. Now, under the new medium-term management plan announced in May 2024, we are entering a phase in which we will produce tangible results under the slogan, "Refine with Digital, Profit with Digital." In addition to accelerating the shift to DX within the company, we aim to monetize our know-how around digital strategies by offering it to our stakeholders.

Since the establishment of the DX Center, Sumitomo Corporation has created various organizations and systems

Can you give us some specifics on how Sumitomo Corporation is promoting DX?

We are promoting DX in three main areas: “Business,” “Corporate/Management,” and “Work Styles.”

In the "Business" area, 44 SBUs are leveraging digital technology to expand earnings. The theme of the new medium-term management plan is "No. 1 in Each Field." Each SBU is challenged to find ways to become "No. 1" in their respective industry or strategic unit. The DX Center is directly engaging with each of the 44 SBU leaders to discuss specific action plans and how the DX Center can work with them.

For "Corporate/Management," we are reforming our business management system by utilizing digital and AI technologies. For example, we aim to enhance investment decision-making using generative AI. As the business of integrated trading companies has shifted from traditional trading activities to business investment, improving the accuracy of investment decisions is crucial. We plan to train generative AI on a vast amount of accumulated investment data, using it as a sounding board when considering new investment projects, drawing insights from past cases and ideas to increase the probability of investment success.

In the third area of "Work Styles," all employees have been provided with tools that use generative AI to improve work efficiency and sophistication. These tools are reducing time spent on routine tasks and report writing, driving operational efficiency and work style innovations.

From Management to the Frontline, Company-Wide DX Brings Efficiency and Creativity

What is Sumitomo Corporation’s key focus in promoting DX?

We ask that each employee views digital technology as part of their job and be willing to make active use of it. Digital technology is a means to an end, not an end in itself. For example, streamlining routine work with digital technology creates extra time, which can be used to create new business or increase revenue. Alternatively, digital technology could be used to create new businesses. Using digital technology and AI, we aim to create an environment in which employees can focus on creative work.

We are also encouraging our management team to take the initiative in utilizing digital technology to increase the speed and accuracy of decision making. We believe that management’s ability to master these new technologies themselves, rather than relying on their subordinates, will lead to faster growth and improved competitiveness for the wider company. We believe that we can achieve growth that exceeds the expectations of investors and other stakeholders by instilling the use of digital technology as a matter of course, from the top down to the front lines.

What are the strengths and competitive advantages of Sumitomo Corporation's business, and what initiatives does the company plan to implement to accelerate them digitally.

The development of prosperous and sustainable cities is one of Sumitomo Corporation’s strengths and one of the businesses that we are looking to accelerate digitally. For example, Sumitomo Corporation is in the process of developing a smart city in northern Hanoi, Vietnam. We plan to apply the know-how gained there to another smart city project in Hakozaki, Fukuoka, for which we were selected as the preferred bidder in 2024. With this project, our aim is to maximize the synergies between real estate development and digital technology to create more efficient and sustainable cities.

One of the reasons for this horizontal expansion is the existence of specialized organizations within the group, such as Insight Edge and SC Digital. Insight Edge, founded in 2019, is a technology specialist that brings together data scientists and AI experts. SC Digital provides DX support services with a focus on marketing DX.

In northern Hanoi, Vietnam, 272 hectares of land is being developed as a smart city with a local real estate company.

When providing DX expertise to external parties, what advantages does Sumitomo Corporation have over competitors such as IT vendors and consulting firms?

Sumitomo Corporation’s greatest strength is that it is rooted in the reality of the business frontline. Our 44 SBUs, which cover a wide range of industries, can absorb the various challenges they experience firsthand at their respective business frontline and combine them with the technologies and know-how of specialized companies to develop solutions for diverse industry segments.

When explaining our work, we at the DX Center used to use the words "assistance" and "support" in relation to solving the problems of individual SBUs and customers, but now we are proud to say that we are "partners" who proactively create new business and value by working together.

What services have you developed at the DX Center to date?

Take, for example, ”moganadx,” a DX service for the manufacturing industry. This service maximizes production efficiency through the visualization and analysis of manufacturing site data. In developing the moganadx service, we interviewed personnel and management at some 70 manufacturing sites. You could argue that the moganadx service was developed in response to feedback from employees on the frontlines of the manufacturing industry.

Other projects include the joint development of an electricity generation forecasting model by three organizations within the Sumitomo Group: Summit Energy, Insight Edge, and the DX Center.We established ENEXIA, a company that uses data technology to forecast the generation of unpredictable renewable energy sources such as solar and wind and optimize supply and demand through market transactions and other means. This example highlights the ways in which the Sumitomo Group, which operates businesses in both the upstream and downstream segments of the power industry, can leverage its strengths and DX know-how.

Leveraging the Strengths of a Trading Company and our Human Resource to Achieve a Sustainable Society

Japan is said to be lagging behind Europe and the United States in promoting DX. What is your view of the state of DX in Japanese industry?

Currently, many Japanese companies rely on the digital infrastructure of US-based companies. I believe this trend will continue, so it is important to fully utilize that digital infrastructure to create value-added businesses and increase competitiveness.

In introducing new technologies, it is sometimes necessary to take risks and be proactive. And, while it is sometimes difficult to quantify how much revenue DX has generated, I believe the shift to a mindset that is open to challenges will be key, even if it means starting small. At Sumitomo Corporation, we too are taking a medium- to long-range view and are promoting challenging initiatives, such as aiming for social transformation through quantum technology, which holds great promise for the future.

How do you think Sumitomo Corporation can make an impact on society and the environment through DX?

Digital technology can be used to tackle a variety of unsolved issues and thereby contribute to the betterment of society and the environment. The key to accelerating the resolution of these issues is the ability to execute onsite; in other words, it is people who utilize digital technology. Our goal is to further accelerate the speed of DX and create new value for the world by taking advantage of Sumitomo Corporation’s strength as a group of human resources with diverse experience and expertise.