Balancing traditional business practices with technology innovation
Japanese companies are managing their transformation agenda by carefully balancing traditional business practices with technological advancements. The government is betting on digital adoption to fight population decline and rural economic disparity.
Globally the IT spending in 2025 is going to grow by 9.8% (Source : Gartner, Jan 2025). In the increased CIO budgets a good portion is getting eaten by price increases. Hence the expectations to spend on innovation are scaled back.
Technology investments in Japan are increasing in foundational areas like cloud, Information security and Artificial Intelligence/ Machine Learning. These foundational technologies drive innovation, enhance operational efficiency and help enterprises maintain competitive advantage in an increasingly digital landscape. With an acute shortage of skilled talent, it is becoming challenging for companies to instill speed in their digital agenda.
Cost intelligence is important
In our new report, Technology cost intelligence in Asia enterprises, Cognizant has partnered with IDC to commission a study, focusing on the role of CIOs in leading digital transformation through cost intelligence in Asia/Pacific enterprises. The study surveyed 80 IT leaders and conducted 14 in-depth interviews within the BFSI and life sciences sectors. We found that
- Cost visibility is declining – 50% organizations lack sufficient tools to analyze costs and make informed decisions on digital initiatives.
- 73% of the leaders struggle with full cost visibility into technology spend across functions and projects.
- 69% of the leaders do not benchmark IT spending against Industry standards and missing optimization opportunities.
CIOs are moving beyond traditional cost management to become strategic value pathfinders, focusing on driving measurable business outcomes through technology investments. To achieve this, they must leverage cost intelligence to arbitrate investment decisions that accelerate business value while engaging with multiple C-suite stakeholders.
Japan - a choice between synergy and business agility
In Japan IT modernization needs to be aligned with the embedded structures in the business culture. Investments in AI, Automation and Cloud are expected to deliver measurable outcomes by driving efficiencies, expanding the digital footprint and creating revenue streams.
CIOs must leverage cost intelligence to improve cost transparency, identify areas for optimization, and most importantly ensure alignment with broader business goals. In our work with Japanese clients we have observed that the KPI’s of IT and business need to be aligned on cost efficiency and strategic outcomes. And it is expected that the success of all IT investments is measurably linked to creating business value and growth. Most organizations believe in steady transformation and rely on consistent efforts aligned with the inherent structures. This approach counters agility and anything that disrupts established organizational structures.
For example we have seen while working with atleast 3 organizations across Insurance and life-science segments where separate budgets are carved out for “ keeping the lights on” work and strategic innovations. This separate treatments in the long term often lead to overspend and wastage of effort. The CIO’s should consider blending the traditional approaches with more flexible practices based on informed decision making.
Managing the transformational imperatives
Cognizant has a number of approaches to helping organizations better understand their costs but, importantly, also their value impact. New tools, new ways of working and more insight-driven decisions can substantially change the economics of your transformation journey roadmap in Japan.
To learn more and read the report on cost intelligence, click here.
