With the managerial philosophy: "Contribute to the formation of an abundant society through real IT communications," NEOJAPAN Inc. is assisting companies in improving operational efficiency and cutting down on costs through development and sale of "groupware (*)," an online technology-based business communication tool, and provision of cloud services. The cumulative total number of users of its major "desknet's" product stands at 3.8 million (as of the end of July 2018). A multitude of aspects of "desknet's," such as the price, functions, reliability, and support system, have been well reputed, gaining the greatest satisfaction rating from customers and sales partners for 4 years in a row (in the groupware category; according to the magazine Nikkei Computer). The Company has embarked on entering overseas markets, aiming at further growth.
(What is groupware?)
Groupware is software developed for information sharing using the network of a company.
On the server of the network set by an administrator, the members of a group can share information, manage schedules, and share document information databases.
For example, when a schedule for a meeting needs to be arranged, groupware enables its users to grasp the schedules of group members at a glance, easily register dates when each of them is available in a timetable, send and receive e-mails about various matters and decisions, and share documents.
The number of companies and organizations that are propelling introduction of groupware keeps going up these days because of its useful aspects, including improvement of operational efficiency, cost reduction, speed-up of decision-making, and cross-departmental information sharing.
【1-1 Corporate history】
Mr. Akinori Saito (current Representative Director and President of NEOJAPAN Inc.), who engaged in research into optical communication systems with extensive know-how of communication technology for which he was highly acclaimed at Nippon Telegraph and Telephone Public Corporation (Current NIPPON TELEGRAPH AND TELEPHONE CORPORATION), transferred to a medium-sized software company in Japan, and then participated in a communications and infrastructure project led by Tokyo Electric Power Company Holdings, Inc. (TEPCO) and served as chief technology officer.
At that time, Mr. Saito, who was among the first to take interest in the Internet that was barely understood and wholly new, was attracted to the possibility that he might be able to make a massive change in the society with the Internet. In 1992, therefore, after the abovementioned project was completed, he founded NEOJAPAN Inc. at the age of 29.
At the beginning, NEOJAPAN conducted development entrusted by TEPCO and other electric power companies. Then, President Saito by himself developed a calendar system, which is one of the functions of groupware, in order to manage schedules of outsourced work. The calendar was very practical, and he received requests from outside companies for permission to use the calendar system.
In those days, although groupware had already been developed, it was designed only for large companies and available at a high price; however, thinking that it was possible to develop groupware at the cost of one-tenth of such expensive software and, more than anything else, that groupware was truly convenient and, therefore, a number of small- and medium-sized companies would be willing to use groupware if one was offered at a low price, President Saito started to sell NEOJAPAN's original groupware "iOffice2000" in 1999 and, in 2002, released its successor model, "desknet's."
Issuance of the license and downloading of the software were conducted via the Internet, which is taken for granted today but was an epoch-making sales method around that time.
The Company successfully took in the needs of companies that were reluctant to adopt the software as expected, and its business expanded rapidly. NEOJAPAN began offering "desknet's NEO," its current major product, in 2012 and released the cloud version in 2013.
The cumulative number of users has exceeded 3 million. Considering that it is necessary to strive for corporate management that is healthier than ever before in order to fulfill the social responsibility towards numerous users, NEOJAPAN got listed on TSE Mothers in 2015.
【1-2 Managerial philosophy, etc.】
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NEOJAPAN Inc. engages in business with the aim of supporting all workers and contributing to social prosperity through development and sale of online technology-based business communication tools.
With ideas that overthrow the established theories and attentiveness unique to Japanese companies, the Company is endeavoring to continuously provide high-quality products and services to society.
(Origin of the Company's name)
The Company has been named "NEOJAPAN (which means a new Japan)" in hopes of bringing advantages of superior information technology (IT) not only to some advanced companies but also to all companies, and changing communication between Japanese companies and the society using the power of computers.
【1-3 Market environment】
◎Trend in the groupware market
The groupware market in Japan was worth 116.0 billion yen, accounting for about 10% of the Japanese software market worth around 1.2 trillion yen in the fiscal 2016 and creating a relatively large market.
The groupware market will grow to 198.6 billion yen by fiscal 2021, with an annual growth rate estimated at 11.4% which exceeds the 6.7% growth rate of the entire software market. While it is projected that sales of the product version that requires an installation of a server by each company will decrease, sales of the cloud version which does not require any initial costs and is easy to install are expected to keep growing at an annual rate of 13.3%.
【1-4 Business content】
With a focus on its major groupware product, "desknet's NEO," NEOJAPAN develops and sells various products and services, including business chat, online databases, online e-mail systems for companies, systems for sending and receiving large-capacity files, sales management systems, and customer information management systems.
Sales are made up by the following 3 segments; the "cloud services" that provides groupware and related products via the Internet, the "products" that sells the license for the groupware and related products, and the "technological development" that develops software as commissioned by other companies.
(1) "desknet's NEO," the major product
As mentioned in 1-1 Corporate History, NEOJAPAN has thrived by developing and selling groupware, and what will grow its business further is the groupware product, "desknet's NEO."
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"desknet's NEO" is one of the groupware developed independently by NEOJAPAN that consistently follows a thorough "hands-on approach." The software has incorporated design features suited to the work styles and commercial practices in Japan, aiming to contribute to the revitalization of companies as well as boosting daily operational efficiency, and possesses the following characteristics:
(Characteristics)
*Usability
The simple and consistent screen design has established an interface that is easy to see and use by anyone, including those who are new to the groupware.
The "user-friendliness" and "simplicity" of "desknet's NEO" improve the situations of the working sites and supports work.
Users can use the groupware without stress on multiple kinds of devices, such as smartphones and tablets.
*High performance
In addition to basic functions, including schedules, information, and online e-mail, 25 full-fledged applications which are capable of dealing with workflow, internal SNS, and global design have been installed by default. The applications are coordinated with each other.
"desknet's NEO" not only possesses various functions, such as schedules, booking of meeting rooms, and e-mails but also, outside the scope of groupware, offers solutions to issues confronted in working sites.
25 applications installed by default
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Furthermore, use of "AppSuite," a tool with which custom-made business apps can be created, enables users to build apps in 4 steps based on a wide range of on-site operations. Apps so developed can be used as one of the functions of "desknet's NEO," and therefore, on-site business processing can be further streamlined according to the situations of each company's work sites.
*Adoption cases
A multitude of companies and organizations, including over 820 public agencies and local governments in 47 prefectures in Japan, have installed the groupware, regardless of industries, business types, and scales. The cumulative total number of users (accounts) have reached about 3.8 million (as of the end of July 2018).
(Form of providing the groupware)
The groupware has been offered in 2 forms: the cloud version and the package version. Lately, however, the cloud version of the software is showing a significant growth, following the soring needs by companies, such as "unwillingness to spend time and effort in installing groupware," "unavailability of dedicated administrators due to a lack of staff who have extensive knowledge and experience regarding IT," "desire to operate in a reliable security environment," and "desire to cut down on initial expenses and operational costs as much as possible."
(Sales structure)
NEOJAPAN itself sells its products and services; however, the Company specializes, in principle, in development and its products have been sold mainly via a total of about 600 agencies and Application Software Providers (ASPs) (*), who are referred to as partners.
(*) Application Software Providers (ASPs)
An Application Software Provider (ASP) is an operator that engages in the business of providing functions of application software as services to customers via networks.
(2) Sales segment
① Cloud services
NEOJAPAN offers the groupware products and services developed by itself, with "desknet's NEO" deemed its major product, and related products on demand at a low price and in a highly reliable cloud environment.
As long as an Internet environment is available, users can use the services without any special investment in systems, such as servers, or knowledge about systems.
Customers are required only to pay a monthly fee or an annual fee for the number of users who will use the services, and they need not pay any initial expenses. The minimum number of users for subscription is 5, and no upper limit has been set.
The monthly fee per user is 400 yen, which is the lowest in the cloud services industry.
② Products
The Company sells the licenses for its groupware products and services, including the major product "desknet's NEO," and related products. It also provides incidental services, such as customization, labor services, and support services.
Customers purchase the licenses and then install the groupware products and services in relevant internal servers, virtual environment, rental servers, and cloud environment.
The "Small License" and the "Enterprise License" are available to small- and medium-sized customers with 5 - 300 users and large-sized customers with over 300 users, respectively.
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③ Technological development
The Company engages in development of individual business applications related to the Internet and Intranet as outsourced by other companies, comprehensively offering a variety of system-related services, ranging from consulting to planning, designing, development, and network infrastructure establishment regarding application systems.
With the aim of cultivating techniques, the Company accepts orders mainly for development projects that are expected to lead to development of products and services for the "cloud services" and "products" segments.
【1-5 Characteristics and strengths】
① Great customers' and sales partners' satisfaction
According to the survey presented in 2018 by Nikkei Computer, NEOJAPAN Inc. won the highest rating in the item "cost" in the groupware section. Also, the Company received high scores in other items, i.e., "reliability" and "serviceability", and was judged that it gained the highest overall satisfaction for 4 years in a row.
In addition, the Company was ranked No.1 in the groupware section of "Nikkei BP Government Technology: IT System Satisfaction Survey targeted at Municipalities 2018-2019".
The Company was also highly regarded by its sales partners, obtaining the top scores in 6 items, including "price competitiveness," "profitability," "technical support," "point of contact," "flexibility," and "delivery date," and taking the greatest partner satisfaction.
The high evaluation from both customers and sales partners has become a strong competitive advantage of the Company's products.
The Company has taken a considerable lead in the industry with not only its outstanding technological abilities realized by the fact that about 60% of its employees are working in development-related departments, but also its comprehensive capabilities, including the user-friendliness and support structure.
② Competitive edge with services and costs
Considering the main players in the groupware market, leading vendors, including foreign companies, have held a large market share; however, NEOJAPAN has a competitive edge with services and costs, which has led to the abovementioned satisfaction rating.
As for functions, products of Japanese vendors have garnered higher reputation than those of foreign companies because support provided by foreign companies, such as localization (systems supporting Japanese, and commercial and business practices in Japan), is not satisfactory.
Twenty-five basic applications have been installed in the systems of NEOJAPAN by default, which has topped the number of functions in services offered by other Japanese vendors.
Installation cost and cost per unit of foreign vendors' products and services tend to be expensive because they are targeted chiefly at large companies.
The introduction and operating costs of NEOJAPAN's systems are the lowest in the industry, with the monthly fee for the cloud services being about one-half and that for the products (installation basis, including on-site hardware services) also being approximately one-half of other Japanese vendors' systems.
③ Business model that realizes stable earnings
Fixed costs are kept at a low level as the Company's products are sold mainly via partners.
Furthermore, in addition to the fact that, once the Company's products have been adopted, multifarious customers continue to use them because of the user-friendliness and low cost, another characteristic of NEOJAPAN is a recurring-revenue business in which sales rise every month on a cumulative basis mainly through monthly billing, a business model that realizes stable earnings.
④ Increased efforts in health management
NEOJAPAN Inc. offers groupware as its main product that contributes to "Work Style Reform" of the companies that have installed that groupware, for example, by improving their work efficiency and productivity. This company itself is increasing awareness of health management.
"Health management" means to think about employees' healthcare from a management perspective and practice it strategically. Based on the corporate philosophy, it is expected that investing in employees' health will lead to revitalization of the organization including better vitality of employees and productivity, resulting in improvement in business performance as well as stock price (taken from the Ministry of Economy, Trade and Industry's website).
President Saito, who likes sports, has always spoken to staff members about "the importance of exercise and meals", "balance between work and dream (personal life)", etc., but as mentioned in the top message on the Company's website for stockholders and investors, he has made a commitment to practice and promote health management in the future.
"In order to practice the management philosophy and realize operations considering global expansion of the Company, we will improve the work environment, where everyone is sound in mind and body and is able to demonstrate his or her ability to the fullest, and promote health management." (Taken from the Company's website. Some parts have been modified by the writer.)
To be more specific, the Company strives to obtain the certification of "Corporation that is excellent in health management", which is designed by the Ministry of Economy, Trade and Industry (METI) and recognized by Nippon Kenko Kaigi, and to be accepted as the "Health management brand", which is selected and announced jointly by METI and Tokyo Stock Exchange.
【1-6 Shareholder return】
NEOJAPAN has deemed shareholder return as an important business challenge and raised the rough indication of the dividend payout ratio to over 20%.
In addition, the Company carries out a shareholder benefit program, in which it presents quo cards worth 500 yen to shareholders holding100 shares or more but less than 200 shares, and 1,000 yen's worth of quo cards to shareholders who hold over 200 shares as of the end of an interim period and the end of each term, respectively.