Digital Business Platform

Hiroshi Kodama, Executive Vice President

1 © NEC Corporation 2019

Overview of Digital Business Platform Unit
Organizational Structure
Digital Shift Digital Power (horizontal) and Deliver Value (vertical)
Provide value in a society featuring
digital inclusion Public
…
Enterprise Public Solutions
Infrastructure Global BU
BU BU
BU
Process Innovation, Digital Business Platform Unit
Customer Value
Upgrading
Digital Business Platform Planning Div.
Customer Experience Operational Excellence

Digital  Design & Services Business Design Div. Emerging SI Technology

Services (Digital assets)
AI, biometrics/images, cloud, security
 NEC Digital Platform
Platform Intelligence, architecture, engineering,
AI analytics, biometrics/images,
NEC Cloud IaaS …
 SW resources that support digital
businesses
• Human resources for digital
• Human resources for IT services
Cyber Security Strategy Div.
AI Analytics Div.
Digital Platform Div.
Service Platform Div.
[Related companies in Japan]
 NEC Solution Innovators
 NEC Communication Systems
 Infosec
Development Div.
Service and Platform SI Div.
Project Management Office
Software Engineering Div.
[Related companies overseas]
 NEC Advanced Software Technology
(Beijing)
 NEC Soft (Jinan)
 NEC China Soft (Japan)
 NEC Telecom Software Philippines

2 © NEC Corporation 2019

(Supplement) Process to Deliver Value and Organizational Functions
Customer Customer Customer Customer Customer
… Customer Customer

• Labor saving
お客様への価値提供
Provide value to customers Labor-saving
in order
Delivery store
placement
Cooperation with existing systems • Enhance store
loyalty

• Automatic
Deliver value Consulting, Offering order
to markets • Entry and placement
Design thinking method, Co-creation program exit • Demand
• Payment forecast

Value creation
Digital Hub: Digital Capability • Hospitality • Defect
etc. forecast
Value chain etc.

Products, Services Biometrics NEC

& image

Security
Enable use of Advanced
Common platform analysis

Cloud
technologies Integrated Analytics
API platform Platform
Face recognition
Engine engine
Heterogeneous mixture
learning engine
Labs

Research into Face recognition

Technologies Heterogeneous mixture
learning technology
underlying technologies technology

3 © NEC Corporation 2019

Trends in Digital-related Markets
 IT domain
The 2nd Platform is diminishing, the 3rd Platform and innovation accelerators are
expanding
 Non-IT domain
Digitalization will create new markets and value further

3 rd PF : CAGR 6.4% 3 rd PF : CAGR 5.4%

Global Japan
2nd PF : CAGR -2.0％ 2nd PF : CAGR -5.0％
Innovation Accelerators
ICT Spending Forecast by Platform CAGR ICT Spending Forecast by Platform CAGR
(Global) (17-22) JPY in billion (Domestic) (17-22) Spending in CAGR(2018-2023)
Domestic
3 rd
PF
6.4%
3 rd
PF
5.4% AI Market 46.4%
Source: IDC, “Forecast for the domestic AI systems market 2019-2023”

Spending in CAGR(2018-2023)
Domestic
2rd PF 2rd PF IoT Market 13.3%
-2.0% -5.0% Source: IDC, “Forecast for the domestic IoT per industry/usecase 2019-2023”

Domestic CAGR(2018-2023)
Security
Service Market 4.3%
Source: Japan IT Market 2019 Top 10 Predictions, IDC Source: IDC , “Forecast for the domestic information security market
2019-2023”

4 © NEC Corporation 2019

NEC’s Strengths in Digital Services Businesses
Advantages Capability
World’s No. 1 in Biometric
Multimodal
Integrated platform
face/fingerprint/iris authentication
authentication
for biometric
Biometrics ×
recognition technology with
Real-time
authentication
And images Results from the international benchmark global track records and image analysis
tests by the U.S. National Institute of image analysis
Standards and Technology (NIST) Case

NEC Group’s policy NEC advanced

NEC Academy
AI
on AI
and human rights analytics
for AI platform
(Announced in April 2019) Case (Lifecycle)
(data use lifecycle) Case

Managed cloud services Industry leading Coping with Japan-made cloud

Cloud /leading company multi-cloud hybrid cloud providing high
availability
IDC Japan’s announcement
（AWS/Azure, etc.)
in Feb. 2019

• High security ability

Cyber security
‣ Industry-govt-academia and
int’l cooperation
‣ Strategic functions,
2 specializing affiliates factory
• Research into security technologies Case
(encryption, security AI, etc)

5 © NEC Corporation 2019

NEC’s Strengths in Technologies
Advantages Capability

• Design thinking
Co- framework Consulting
Creation • Organize service
design

• Cope with tens of Open

AI system for
millions of users Combination SI support
(OSS promotion
（Organize digital SI） (Use of quantum
such as companies, center) technology) Case
govts and carriers
Software Factory Agile Framework
・open-perspective
（Secure ＆ portable） ・neo-lightning
•Software Factory
# of PJ: over 2,600 Project management
Accumulated #: Dynamic resource
(Data White Paper,
over 5,000 AI forecast: PRAS)
(WARTS)
Users: over 36,000
6 © NEC Corporation 2019
Biometric Authentication and Image Analysis Provide 1,000 systems to more
than 70 countries and regions
in the world
Crime investiga-
National ID tion and monitoring Boarding
Public Safety Police, Local Government,
(State - Safety
Society & Security)
Shopping Street

Foreign Better Safe and

Government etc.
vaccination rate Comfortable Narita Airport
management Unmanned store Optimized for
City Group Strict of large events customers Hospitality
(Town - Living) Loyalty
identifi- Invigoration of
cation community
Gavi,Simprints Asian Games

Safety and Taiwan 7-Eleven CaliBurger

Enterprise security for Nanki Shirahama Airport,
(Company) Large Scale Event Surrounding Facilities
condo residents Face recognition, Push ads
Empty-handed Case
Mobile money payment
transfer and
Anabuki Construction,
Individual payment service, Fulltime System
Mobile User identification
(Individual) Major Financial Institution
(Demonstration Experiment) Station, Mall, Vending Machine

LINE Pay

Authentication Security Payment Marketing Hospitality

Experience
Integrated platform
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[Biometric Authentication] Usecase (Nanki Shirahama Airport and Surrounding Facilities)

Travel experience with “special hospitality”

owing to the town-wide linkage through
face recognition and IoT (Smart hospitality)
HOTEL

Hospitality, Hands-free
Hospitality, Hands-free
payment
Hospitality, Keyless, payment,
Tourist Hands-free Entry without
information payment waiting

Airport Hotel Theme Park Shops, Restaurants

Digital platform that links experience together

from the customer’s standpoint
(AI, IoT, Cloud, Security)

Invigorate community and realize society where people can live a prosperous life
8 © NEC Corporation 2019
[AI and Analytics] Usecase (Seven-Eleven Japan)
Labor-saving store on 20th floor of Walkthrough entry
Non-stop store
by face recognition
Mita International Building, Tokyo Empty-handed payment
supported by IoT

（Opened in December 2018） Customer support Demand forecast

with “PaPeRo i” by AI

Achievements (6 months)
AI development
environment /AI-API • # of visitors ……… Up 15%
AI discovery Inspection, NEC Advanced • Sales …………… Up 40%
Research &
program planning
development/ Analytics Platform
Data use
introduction • # of face registrants ……Over 3x
lifecycle
Voice from users (questionnaire)
Operation &
utilization Use frequently
• Effective time use,
higher convenience ……
70%*
Dashboard * Workers on upper floors

• Satisfied with lineup … Over80%

Realize consistent evolution through data use lifecycle
9 © NEC Corporation 2019
[AI and Analytics] NEC Academy for AI

Human resources that can understand AI

correctly and return its benefit as social
value
School Industrial world
Comprehensive initiative toward
human-led AI society where NEC Group’s methodology
people can use AI to foster HR for AI Relearning
Literacy
(Lifelong
effectively and safely education
Fostering policy Certification learning)
for AI system for
resources AI resources

 Established “NEC Group Policy for AI and Human Rights”

1) Fairness, 2) Privacy, 3) Transparency, 4) Accountability, 5) Proper use, 6) Development of AI and fostering of human
resources, and 7) Dialogues with multiple stakeholders
 Provide opportunities from training courses to the learning environment on a one-stop basis
 Realize open innovation through opportunities for learning, exercising and networking

10 © NEC Corporation 2019

[Security] Cyber Security Factory
Realize a world where everyone can use digital
devices and services safely
Security By Design
Consider security from planning
and design phases

Make Sustain Defend

against
properly normal attacks
Secure Proper
development environment
and building sustaining Abnormality detection

Proper Proper
Investigation
Recovery
Cyber Security Factory
data data  Provide one-stop services, such as the introduction
generation distribution
and foundation of a security system, operation and
monitoring on a 24/7/365 basis, and emergency
response to an incident
 Develop and introduce a ”threat analysis system”
using AI

11 © NEC Corporation 2019

[AI System for SI Support] Upgrading SI Technologies with AI

Optimize SI knowledge with AI

Challenges
Quantum computer  Shortage of 430,000 IT engineers
(Under research) expected for 2025*
Generation of Combinatorial
SE constraint equation optimum solution  Short supply of advanced IT specialists
 Urgent need of IT system renewal by 2025
 Combination of a huge quantity of
AI system for SW and services
Customer SI support  e.g. Various and a large quantity of OSS
(approx. 500 types) at present
* METI, Report on Digital Transformation: Overcoming of “2025 Digital Cliff”

 Project management (Data White Paper)

SI knowledge base  Knowledge, PKG, service
 Software Factory
SI system components
 SI automation (CASSIOPEIA)

Cloud, On-premises Client

multi-cloud PKG system
12 © NEC Corporation 2019
 Next NEC
Toward a society where everyone shines with digital power
Accelerate customers’ digital shift Strategic targets（2018→2020）

Sales team Sales team Sales team Partner

Ratio of
Digital 30%
Business design Projects*
12％
Digital Hub Accumulative
3,000
Digital Capability Digital
Frame Business System
Usecases Accumulative
(AI, Biometric
work framework framework Authentication) 1,700
Knowledge on Knowledge on
Know-
ledge
businesses systems Digital
Human
3,000
Engineering people
Resources
Assets
Bio-
Images AI Cloud
Existing 1,600 people
metrics assets * Classified the domestic SI and service business into SoE/Bimodal/SoR using IDC’s definition of the
3rd platform. Of them, projects falling under SoE/Bimodal are regarded as digital projects.

13 © NEC Corporation 2019