Making a Shift to Digitally Transform

Renée McKaskleSVP, CIO

Hitachi Digital Business

May 2, 2017

What Used To Be Two Worlds

Information Technology (IT) Operational Technology (OT)

Business

and Human

Driven DataIT OT

ERP

Email

Video

Machine

Driven Data

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Are Now Integrating Are Now Integrating

DATA

[We] exist so enterprises can create and

derive value from their

GAP

FOUNDATION TO ACCELERATE

DIGITAL TRANSFORMATION

QUALITY DATA

DATA

Store

Manage

Secure

Protect

Govern

Correlate

Aggregate

Blend

Analyze

Mobilize

Visualize

Predict

Learning

Insight

Connect

Cognitive

Machines

IoT

Edge

Data Center

StructuredCloud

Search

Migrate

Stream

Every Industry Is Under Pressure

NEW COMPETITION FROM DIGITAL DISRUPTORS

CONFIDENTIAL – For use by Hitachi Data Systems employees and other audiences under NDA only.

Why Digital? To Keep YOUR Business Relevant by…

Accelerate cost efficiency

and time to market by

rethinking

OPERATIONS AND

PROCESSES

PROCESS AUTOMATION

WORKFORCE MOBILITY

SUPPLY CHAIN EFFICIENCY

Increase loyalty and grow

revenue by improving

MOBILE COMMERCE

REAL-TIME INFORMATION

PERSONALIZED ENGAGEMENT

CUSTOMER

EXPERIENCE

Unlock new revenue

streams and reach new

markets with

NEW BUSINESS

MODELS

DATA-CENTRIC SERVICES

GLOBAL EXPANSION

DIGITAL COMMERCE

PROCESS PEOPLE TECHNOLOGY

Digital Transformation Changes Everything

IT’S IMPERATIVE, BUT IT’S NOT EASY

It Requires Modernization to Enable Innovation

2nd Platform / Mode 1 3rd Platform / Mode 2

CLOUDSTORAGE CONVERGED FLASH

HYPER-

CONVERGED

MANAGEMENT

SOFTWARE OBJECT ANALYTICS

Modernize

the Core

Innovate

With Data

SYSTEMS OF RECORD:

Modernize

the CoreBridging the Infrastructure

Converged Solutions & Cloud

All Flash Data Center

Bridging the Data

Object Storage

Bridging the Information

Data Lakes & Analytics

Bridging the

Bimodal Divide

Agile & DevOps

High Velocity & Reliability

Scale, Collaboration, Security

Open Source

Highly Scalable Enterprise

Solutions

Micro-services & Containers

Distributed & Scalable Services

SYSTEMS OF INNOVATION:

Establish New

Relevancy

Bridging The Bimodal Divide

HITACHI AND FORBES INSIGHTS GLOBAL RESEARCH

The Business Landscape for Digital

Transformation

Deepen our understanding

of the business landscape

for digital transformation

Identify inhibitors to

successful transformation

Uncover what puts digital

transformation leaders so

far ahead of the pack

39%

34%

28%

573

C-LEVEL EXECS

46% BUSINESS

54% TECH

$500M+

REVENUE

10%

14%

31% 32%

13%

10%

13%

35%33%

9%

Global

APAC

What best describes your company’s progress with

regards to digital transformation?

Digital Maturity

Ad Hoc Beginner Intermediate Advanced Leader

LEADERSLAGGARDS

GLOBAL

LEADERS

INDUSTRY

GEOGRAPHY

The Next Two Years Are Pivotal

I expect my organization to undergo vast

digital transformation in the next two years

49%

Global respondents55%

APAC respondents

More respondents in APAC expect to be

impacted by Digital Transformation by 2018

The Journey to Digital Transformation

55% of APAC executives believe

their organizations will be

vastly digitally transformed

over the next two years.

1. Prioritize and invest in digital

transformation

2. Let business outcomes drive DX

3. Become more data-driven

4. Adopt an enterprise-wide

approach to DX

5. Balance people and technology

5 Steps to Digital Maturity

50%

38%35%

24%22%

60%

41%

34%

27%

18%

Global

APAC

1. Prioritize and Invest in DX

Digital

Transformation

Expansion

(M&A, JVs)

New products/

services

Diversification to

new business area

Geographic

Diversity

Digital Transformation seen as the highest priority globally for both IT and LOB

executives, and even more so in APAC

Top Strategic Priorities

1. Prioritize and Invest in DX

Digital

technologies

Data/analytics

capabilities

New products/

services

Geographic

expansion

IoT

technologies

Top 3 agreed by both IT and LOB executives;

Surpassed business model transformation, acquisitions, talent and brand marketing

Top Investment Priorities

51% 51%

45%

40%38%

65% 65%

50%

44% 45%

Global

APAC

1. Prioritize and Invest in DX

22% of DX budgets have

increased by more than 10%

since 2014

41% of expect to see a similar

increase by 2018GLOBALLY

23% of DX budgets have

increased by more than 10%

since 2014

55% of expect to see a similar

increase by 2018

ASIA

2. Let Business Outcomes Drive DX

New business

models

New

technologies

Industry

competitors

Customer

expectations

Non-traditional

competitors

Partners,

vendors, etc.

Interestingly, regulatory environment and economy were the lowest drivers of DX

While APAC respondents are turning to DX to stay ahead of the competition

Top External Drivers of DX41% 40%

36% 35%

23%

16%

42%

38%

42%

33%

25%

15%

Global

APAC

Top Six Measures of Digital Transformation Success

2. Let Business Outcomes Drive DX

GLOBAL ASIA

46% ABILITY TO INNOVATE 57%

46% REVENUE OR MARGIN GROWTH 54%

43% COST REDUCTION 49%

41% CUSTOMER ACQUISITION / RETENTION 49%

39% CUSTOMER ENGAGEMENT 41%

37% EXPANSION INTO NEW MARKETS 47%

OVERALL ASIAFINANCIAL AND

INSURANCE TELECOM HEALTHCARE

Innovation in products and services 55% 61% 42% 53% 46%

New business models and revenue streams 46% 55% 48% 56% 39%

Internal processes and organization 46% 42% 38% 40% 53%

Improved customer relationships 42% 43% 49% 42% 44%

2. Let Business Outcomes Drive DX

Top DX Outcomes by Industry Over Next 2 Years

3. Become More Data Driven

31%

60%

9%

More than 5%

Up to 5%

No increase/not sure

What has been the effect of data analytics on your revenues?

GLOBALLY ASIA

39%

56%

5%

More than 5%

Up to 5%

No increase/ notsure

Highest Data Analytics Capability

Highest Need According to IT

Highest Need According to LOB

IT 58% 23% 19%

FINANCE 15% 15% 14%

SALES AND MARKETING

7% 20% 23%

OPERATIONS 8% 21% 14%

3. Become More Data Driven

Synchronize Data Analytics Need and Capability

Significant gaps exist in analytics capability for business functions,

especially between Finance and Sales

4. Adopt an Enterprise-Wide Approach

55%

in APAC believe IT is

fully ready for

digital transformation

42%

consider the other

business functions as

fully ready

In Asia, Sales and Marketing was

ranked the function least ready for DX

Who is leading the development of your organization’s DX strategy?

4. Adopt an Enterprise-Wide Approach

Dedicated

Team

Cross-

Functional Team

IT

51%

40%

50%

31%

36%

57%

40%

57%

39%43% Global

APAC

Individual

Functions

Consultants

Who is leading the implementation of your organization’s DX strategy?

4. Adopt an Enterprise-Wide Approach

Dedicated

Team

Cross-

Functional Team

IT

29%

35%

54%

36%

31%

37%40%

59%

51%

33%

Global

APAC

Individual

Functions

Consultants

5. Learn to Balance People and Tech

Top Challenges of Digital Transformation

1. Legacy technologies (29%)

2. Lack of talent (23%)

3. Lack of collaboration (23%)

Top Contributors to Digital

Transformation Success

1. Technology (56%)

2. Vision/strategy (29%)

3. Top-level executives (29%)

Technology seen as the top contributor to DX globally but in APAC, lack of talent and collaboration are holding back progress

GLOBAL

Top Challenges of Digital Transformation

1. Lack of talent (29%)

2. Lack of collaboration (27%)

3. Legacy technologies (26%)

Top Contributors to Digital

Transformation Success

1. Technology (54%)

2. Top-level executives (42%)

3. Vision/strategy (25%)

ASIA

5. Learn to Balance People and Tech

Cloud Mobile Analytics IoT Social Media

Technology Focus for Digital Transformation

64%

44%42%

31% 30%

64%

40%38%

41%

31%

Global

APAC

5. Learn to Balance People and Tech

People are an undervalued success factor in digital transformationLEAST VALUED MOST VALUED

Legacy technologies 26%

Lack of talent 29%

Lack of data access/sharing 27%

Lack of vision/strategy 19%

Consensus about course of

action18%

Top APAC Challenges of

Digital Transformation

Technology 54%

Vision/strategy 25%

Top-level executives 42%

Business leaders 20%

Talent/capabilities 23%

Top Contributors to APAC

Digital Transformation Success

Additional Elements of Our Research

Econometric Research on Benefits of Technology Investments

How does technology spending impact company performance?Analyzed company IT spend during recession (’07-09) and their revenue growth during recovery (‘10-15)

Companies that prioritized technology spend during the recession

experienced 86% greater revenue growth during the recovery.

100 COMPANY

AVERAGE

16%

INCREASED

TECH SPEND

-20%

0%

20%

40%

60%

40%

11% 8.6%

DECREASED

TECH SPEND

-18%

5.7%

Technology CAGR

Post-recession

revenue CAGR

“Digital Mindset and

Competencies, Not Technical

Skills, Drive the Digital Edge

in Performance”

Final Thought…

Gartner (July 2016)

Executive Interviews

Renee McKaskle, CIO, Hitachi Digital Business

Kim Stevenson, COO, Intel

Pascal Viginier, CIO, Orange

Peter Russo, VP of Product Marketing, SAP

Malcolm Frank, EVP and CMO, Cognizant

Monique Shivanandan, CIO, Aviva

Simeon Preston, COO, AIA

Ramesh Narayanaswamy, CIO, SingPost

David Smoley, CIO, AstraZeneca

Andy Frawley, Former CEO, Epsilon

Questions and Discussion

Thank You