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Monday, December 11, 2023

What are the challenges and solutions for promoting DX in rural areas and what is the future impact of the Corona Disaster?

The "Basic Policy for Creation of Towns, People, and Work 2020" announced by the Secretariat for Regional Development of the Cabinet Office in July 2020 states that one of the policy directions for regional development is to strongly support DX in regional areas. However, the promotion of DX in local regions is now at a new crossroads, as the environment surrounding DX has changed dramatically due to the Corona Disaster, in addition to the existence of challenges unique to local regions.
In this article, we will organize the DX challenges that exist in local cities and then present some solutions. We will also look at actual cases of DX promotion in local cities and overseas, as well as the impact of the Corona disaster on DX promotion.
Table of Contents
What are the challenges to promoting DX in rural areas?
How to solve issues
Examples of DX Promotion
What is the impact of the corona disaster on DX promotion?
Solving DX Challenges through Open Innovation

What are the challenges to promoting DX in rural areas?

One of the DX challenges for local cities is the "lack of human resources" and "hesitation to change. Many local communities may be concerned that they do not know where to start in promoting DX.

Lagging behind in promoting DX to leverage digital to transform business is more pronounced in rural areas.It is.
Therefore, we will elaborate on the challenges to DX promotion in the two regions to solve the issues.

shortfall in human resources

IT engineering personnel are indispensable in promoting DX. However, according to the Ministry of Economy, Trade and Industry's "Survey on IT Human Resources Supply and Demand," there is already a shortage of 220,000 IT personnel as of 2018, and that number may reach as high as 450,000 by 2030.

Major companies have responded to this situation by raising starting salaries and other moves to lock in college graduates,Local companies are finding it increasingly difficult to secure IT personnelIt is.

hesitate to change

According to the "2020 White Paper on Small and Medium Enterprises" published by the Small and Medium Enterprise Agency, the percentage of small and medium business owners in their "70s and older" is increasing every year, while the percentage of those in their "40s and younger" is decreasing, indicating that the aging of small and medium business owners is serious.

Essentially, it is small and medium-sized businesses in rural areas that need to adopt new technologies to address issues such as depopulation. However,It is difficult to promote DX if top management is hesitant to make major changes in IT and DX.I think it is.

How to solve the problem

There are three ways to solve the rural DX issues described above.

  • Work with local governments to secure human resources
  • Share the need for system renewal within the company
  • Leverage open innovation

DX is also an important management issue for regional companies,Need to work with the entire organization, including managementThere are some However, many companies in rural areas are still shying away from it. Let's take a closer look at how to solve DX issues in rural areas.

Work with local governments to secure human resources

The Hokkaido Government and prefectural governments regularly hold U-turn and I-turn consultation meetings to encourage people to reside in the region. Therefore,Work with each municipality to secure human resourcesThis is one way to do it.

In addition, regional trading companies in Miyazaki Prefecture are promoting DX of IT human resources in local industry and government, utilizing the Regional Development Cooperative Team system. The "Regional Development Cooperation Corps" is an effort to settle down and settle in an area while engaging in "regional cooperation activities" for a term of one to three years.

In this way, by working with local governments and utilizing each system, we may be able to secure human resources involved in DX promotion.

Share the need for system renewal within the company

In many cases, local SMEs have not even progressed to digitization or digitalization before DX promotion. As discussed in the Issues section, the main reason for this may be that managers and employees tend to be hesitant to change and are unable to fully adapt to change.

Continued inability to benefit from the latest technology (system legacy) leads to disadvantages such as high maintenance costs, operational risks due to lack of support, and delays in responding to user requests.The first step in promoting DX is to spread awareness within the company of the various disadvantages of not revamping systems and to create a sense of crisis.Let's step out of the

Leverage open innovation

In promoting DX, the closed nature of companies and the availability of human resources are hurdles. Therefore,Open innovation," a method of receiving new knowledge and technology from startups and IT companies with advanced IT technologies and working together to create new innovations, is useful for promoting DX in local regions.It is.

The implementation of open innovation, in which businesses collaborate with other companies, leads to the creation of ideas that could not be generated by the company on its own. Furthermore, by utilizing the newly created resources for the next round of innovation, it will lead to the continued growth of the company.

Japanese companies used to close their information, but an increasing number of them are now using open innovation to achieve results. In today's rapidly changing society, we must continue to meet the needs of our customers,Need to constantly incorporate new ideas and technologies through open innovationIt is.

Examples of DX Promotion

While understanding the importance of DX promotion, many companies may be concerned that they do not know where to start, or that they cannot determine whether their efforts are the right ones. In today's society, where consumer needs are diversifying, it is necessary to constantly incorporate and implement new information.

Therefore, we will introduce examples of how local cities are actually promoting DX in the private sector, local governments, and overseas, respectively.Refer to how companies that have already introduced DX are using it, and use it as a reference for your own company's effortsTry it as a

Examples of Private Sector Initiatives

It is a local financial institutionFukuoka Financial Grouphas included the promotion of DX among its basic strategies in its "Sixth Mid-Term Management Plan. As part of this plan, we are engaged in a comprehensive consulting business that includes ITAccentureand financial ecosystem ".iBanklaunched.

We were also able to develop our own mobile application, Wallet+,Utilizing Accenture's Mobile Up Studio, which is in a different industry.This is probably because they were able to do so.

Examples of Local Government Initiatives

Professor Namiko Numao of Toyo University cites "the need to stamp the documents, the need to go to a face-to-face consultation service to prepare the documents because they do not know how to fill out the forms, and the difficulty in securing the manpower and financial resources required for the systemization" as the reasons why local governments are slow to go online (Source: Jichitokai News Letter vol. 0 [November 15, 2020] | Tokyo Municipal Autonomy Research Foundation). (Source: Jichi Chosakai News Letter vol. 023 [November 15, 2020 issue] | Tokyo Municipal Autonomy Research Institute). In other words,As in the private sector, local governments must secure human resources to promote DXIt is.

Ehime prefecture (Shikoku)In order to promote municipal DX, the digital platform "Digilab Ehime (tentative name)The company has announced the launch of a new project, "Open Innovation", which aims to bring in companies and human resources from the Tokyo metropolitan area and co-create with the public and private sectors. This could be considered a form of open innovation.

Examples of Overseas Initiatives

Famous for pizza delivery.Domino's PizzaAs part of its DX strategy, the company developed a digital platform that allows customers to order pizzas from a variety of devices without location restrictions. The digital platform was further developed and improved, and in 2016, the smartphone app "Zero ClickThe company is releasing a "new" version of the product.

Zero Click has implemented a "let go order" feature that allows users to complete an order by simply launching the application and waiting 10 seconds. As a result, annual revenue in 2019 was approximately $3.6 billion, about 2.5 times the $1.4 billion in 2008, and the stock price rose more than 3,600% from January 2010 to July 2018.

Domino's Pizza Appoints Digital Savvy as Chief Digital Officer as It Rolls Out DX StrategyTo promote DX, knowledge of the latest technologies is essential.

This is a good example of how placing a person with deep IT knowledge in charge can raise awareness throughout the company and lead to the success of DX.

What is the impact of the corona disaster on DX promotion?

DX promotion is greatly accelerated by the Corona Disaster, according to the "Digital Transformation Survey of Enterprises in Japan (FY2020)" published by Dentsu Digital in December 2020,50% of companies responded that DX promotion "accelerated" due to the impact of the Corona disasterThe number of employees is approximately 1,000.

In fact, it is said that the Corona disaster has accelerated DX by seven years, and it is fair to say that it has had a major impact on DX promotion. However, as DX promotion has accelerated, an issue that has come to the fore is the "shortage of skills and human resources.

As DX accelerates, an increasing number of companies are having difficulty in securing human resources, citing reasons such as "there are not enough human resources to train" and "the environment for in-house training is not well-developed. FurthermoreSecuring and fostering human resources is a major issue for DX promotion in rural areas where there is a severe outflow of young people and financial resources are scarce.This will be the case.

Reference:DX in Japanese Companies Accelerates with Corona Disaster, but Barriers to Promotion are DX Human Resource Development | Press Release

Solving DX Challenges through Open Innovation

Local economies that had benefited from tourism were severely damaged by the outbreak of the new coronavirus. On the other hand, it also exposed the risk of concentration in large cities, which may lead to significant changes in people's attitudes and preferences in the future.

The Corona disaster accelerated the DXing process by 7 years.It is also said that there should be no difference in comfort between large cities and regional cities in the future. Therefore, with reference to examples of domestic and overseas initiatives,Promptly promote DX in rural areasIt must be done.

However, the acceleration of DX promotion in the Corona Disaster has highlighted a new challenge: the lack of skills and human resources.One of the ways to solve issues such as human resource shortages in promoting DX is to utilize open innovation.It is.

If you are struggling to secure technology and human resources to promote DX in your region, please consider implementing open innovation.

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