The Inside Story of Enterprise Technology in Japan (2020)

The Software-as-a-Service industry (SaaS) industry saw massive progress in 2019, bringing immense value to companies by making software more affordable and accessible, as well as providing cloud-based solutions as an efficient and effective way to leverage data and real-time communication. According to the Global Enterprise Software market size, share, trends and forecast to 2022 report by Orbis research, the global enterprise software market is set to exceed USD 500 Billion by 2022. In Asia, Japan is one of the leading adopters of this technology, with Fuji Kezai Group expecting its software market to reach $19 billion by 2021, with SaaS topping $6 billion.

Japan currently has the potential to become a global leader in the sector, driven by a declining population that will need the tech industry to step in and make the labour force more productive and efficient. This need will be especially needed in labour-intensive industries such as manufacturing, food production, construction, logistics, and the medical and financial sectors. Additionally, with the country’s 5G network transformation set to be completed by mid-2020, consumers will increase their expectations of digital platforms, pushing businesses to develop even more intuitive digital experiences to meet these demands. These factors against the backdrop of a slowing global economy that necessitates business and digital transformation, have led to a robust outlook for enterprise technology (ET) in Japan.

Market Overview: A critical need for ET talent

Despite a positive outlook, Japan’s ongoing talent shortage, combined with the rapidly changing skill sets required in the industry have led to a severe talent crunch in the sector. External factors such as the impending 2020 Tokyo Olympics have further exacerbated this shortage, with expectations running high that the games will help transform the country. Prime Minister Shinzo Abe said he sees the Olympics as “vitalizing … the whole of Japan,” with plans for robots, automated fuel-cell cars and man-made meteor showers that aim to make the games the “most innovative in history.” As Isao Ko, Business Manager at Hays Japan explains, “Japan is becoming a far more open country as compared to previous years. Spurred by the coming Olympics, the government is driving a more international way of working across industries. From an IT perspective, this means legacy systems now need to be upgraded. Enterprise companies are expecting an influx of business from these preparations for more global interaction.”

“IT leaders will need to act as trusted advisors to business leaders, who will increasingly insist on taking a greater share of ownership of the solutions their teams use, and for whom technology will be seen as critical to creating business value.”
Source: State of Enterprise Software Report 2019, IRBS

According to recent research published by IRBS in its State of Enterprise Software Report 2019, the SaaS business software revolution will be well underway by 2020. During this time, IT leaders will need to act as trusted advisors to business leaders, who will increasingly insist on taking a greater share of ownership of the solutions their teams use, and for whom technology will be seen as critical to creating business value. Commenting on the changing nature of traditional IT roles, Isao says, “Consulting firms as well as IT vendor companies have been expanding as more organisations have been embarking on new projects and upgrades, for which they need advisory. When companies undertake something new like digitalisation, they need advisors with an IT perspective who can lead new tech initiatives.”

However, candidates with an IT-based advisory skill set are exceedingly rare in Japan’s already talent-short IT market. This is made more complicated by the demand for bilingual or even trilingual candidates (Japanese, English and Mandarin). This has led to more Japanese companies looking to hire from overseas regions such as China and Korea as Isao shares, “Companies are looking to hire abroad but this is still a very new concept that organisations in Japan have to get used to. As recruiters, we have been trying to educate our clients on the market and how they may need to be more flexible on their requirements to adjust to the current market. But this will be a gradual and ongoing process.”

The shortage has also led to an increase in flexible recruitment solutions, or the hiring of contracting and temporary professionals, as well as outsourcing. “Companies need a lot of advisory from IT and sourcing vendors and have started outsourcing their resources little by little. Often in in-house IT roles, after employees are done implementing a specific IT software or system, their utility is restricted to QA or support. Contracting or IT vendor outsourcing may thus be more appropriate solutions for such roles,” says Isao.

Skills in Demand: ERP professionals with PMP and SAP certifications

For both in-house and vendors, mid-junior level ERP candidates are most in demand. While SAP knowledge is most preferred, other ERP software such as those from Microsoft and Oracle are also seeing an increased demand. Soft skills have grown to be almost equally important, with mindset and culture fit being almost equally important as technical skill sets. As Isao explains, “Organisations are looking for candidates with a proactive mindset. Japanese organisational culture was known to be more passive, with some even being afraid to speak up to their seniors. This is changing now, and organisations prefer a more open outlook.” Specific roles in demand include SAP business analysts, SAP associate consultants, SAP junior project managers and project coordinators.

“Organisations are looking for candidates with a proactive mindset. Japanese organisational culture was known to be more passive, but this is changing now.”
- Isao Ko, Business Manager, Hays Japan

Similarly, soft skills have also become increasingly important for senior-level hires, alongside requirements of extensive people and project management skills. Experience in managing multicultural teams has risen to top this list of priorities, in preparation for the impending global, multicultural interactions as Japan continues to grow more open. “Senior management will need to be familiar with different nationalities and comfortable dealing with different cultures as the near future is expected to be very multicultural,” shares Isao.
Senior roles in demand include Internal IT and IT Directors, while IT vendors and consulting firms are seeking and for IT Senior Managers and Directors for SAP projects. While the market is leaning towards SAP, knowledge of other ERP software like Microsoft Dynamics are currently in shortage. Successful candidates, particularly those in SAP, can expect to receive generous pay packages and benefits. Professions with both PMP and SAP certifications are the most sought after.

Organisations ramp up promotional hiring activities

Owing to the shortage in talent, organisations have significantly ramped up their promotional hiring activities to increase visibility and attract candidates. For enterprise tech companies with their own product or system, it has become almost essential and more commonplace to hold big public outreach events. These events are intended to promote their company and products to both potential employees and customers. Giving an example, Isao recalls, “SAP recently held an event of their own that offered free training for non-SAP candidates. The event posed as a way to display how the technology works, as well as a trial for those who are unfamiliar to test it out.”

Apart from this, promoting company culture has also become a priority as awareness of work-life balance continues to spread across Japan. “Candidates nowadays are very careful about company culture and closely consider work-life balance and compensation between competitors. This has been increasing over the last few years,” says Isao.

For organisations looking to beat their competition, Isao recommends changing up the interview process and letting candidates ask questions as well. “First interviews should be more balanced, because they are opportunities for candidates and clients to get to know each other. Often, websites are the only source of information for a candidate who never really have a chance to get to know company – this could be disadvantageous to hiring employers. Letting them ask more questions would give them a chance to get to know both the interviewer and company better.”

Looking into the future, Isao believes outsourcing companies will continue to gain more power over the next five years. “To balance this, companies will need to strengthen their internal IT departments and bring back the traditional notion of stability to the sector that has since been lost.”